THE  ONIVFRSnT  tlBRWHI 

aNIVERSITY  OF  CAUfORNIA,  SAN  DIEQD 

U  JOLLA.  CAUFORNtA 


3  1822  00015  0268 


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|)art,  §>tl)affncr  &  iflarj; 
Prt^e  Economic  CggapK 


THE  CAUSE  AND  EXTENT  OF  THE  RECENT  INDUS- 
TRIAL PROGRESS  OF  GERMANY.    By  Earl  D.  Howard. 

THE  CAUSES  OF  THE  PANIC  OF  1893.  By  William  J. 
Lauck. 

INDUSTRIAL    EDUCATION.      By  Harlow  Stafford  Person, 
Ph.D. 

FEDERAL  REGULATION  OF  RAILWAY  RATES.  By  Al- 
bert N.  Merritt,  Ph.D. 

SHIP  SUBSIDIES.  An  Economic  Study  of  the  Policy  of  Sub- 
sidizing Merchant  Marines.     By  Walter  T.  Dunmore. 

SOCIALISM  :  A  CRITICAL  ANALYSIS.     By  O.  D.  Skelton. 

$1.50  nei. 

INDUSTRIAL  ACCIDENTS  ANDTHEIR  COMPENSATION. 
By  Gilbert  L.  Campbell,  B.  S. 

THE  STANDARD  OF  LIVING  AMONG  THE  INDUSTRIAL 
PEOPLE  OF  AMERICA.  By  Frank  H.  Streightoff.  (/» 
preparation .) 

Each,  large  crown  8vo,  #1.00  net,  where  not  otherwise 
indicated.     Postage  10  cents 

HOUGHTON   MIFFLIN   COMPANY 
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^(xxt,  ^c^affn^t  &  (JTlatx  ^txjt  600^^0 


THE  CAUSE  AND  EXTENT  OF  THE  RECENT 
INDUSTRIAL  PROGRESS  OF  GERMANY 


THE  CAUSE 

AM)  EXTENT  OF  THE  EECENT 

LfTDUSTEIAL  PEOGEESS 

OF  GEEMANT 

BY 

EARL  DEAN  HOWARD,  Ph.D. 


BOSTON    AND    NEW   YORK 
HOUGHTON    MIFFLIN    COMPANY 


COPYRIGHT  1907  BY  HART,  SCHAFFNER  ft   MARX 
ALL  RIGHTS  RESERVED 

Published  April  1(307 


PREFACE 

This  series  of  books  owes  its  existence  to  the  generosity 
of  Messrs.  Hart,  Schaffner  &  Marx  of  Chicago,  who 
have  shown  a  special  interest  in  trying  to  draw  the  atten- 
tion of  American  youth  to  the  study  of  economic  and  com- 
mercial subjects,  and  to  encourage  the  best  thinking  of 
the  country  to  investigate  the  problems  which  vitally  affect 
the  business  world  of  to-day.  For  this  purpose  they  have 
delegated  to  the  undersigned  Committee  the  task  of  select- 
ing  topics,  making  all  announcements,  and  awarding  prizes 
annually  for  those  who  wish  to  compete. 

In  the  year  ending  June  1,  1905,  the  following  topics 
were  assigned:  — 

1.  The  cause  and  extent  of  the  recent  industrial  progress 

of  Germany. 

2.  To  what  is  the  recent  growth  of  American  competition 

in  the  markets  of  Europe  to  be  attributed  ? 

3.  The  influence  of  industrial  combinations  upon  the  con- 

dition of  the  American  laborer. 

4.  The  economic  advantages  and  disadvantages  of  present 

colonial  possessions  to  the  mother  country. 

5.  The  causes  of  the  panic  of  1893. 

6.  What  forms  of  education  should  be  advised  for  the  ele- 

vation of  wage-earners  from  a  lower  to  a  higher 
industrial  status  in  the  United  States  ? 


vi  PREFACE 

7.  What  method  of  education  is  best  suited  for  men  enter- 
ing upon  trade  and  commerce  ? 
The  present  volume  was  awarded  the  first  prize. 

Professor  J.  Laurence  Laughlin, 

University  of  Chicago,  Chairman. 
Professor  J.  B.  Clark, 

Columbia  University. 
Professor  Henry  C.  Adams, 
University  of  Michigan. 
Horace  White,  Esq., 
New  York  City. 
Hon.  Carroll  D.  Wright, 
Clark  College. 


CONTENTS 

PART   ONE  — EXTENT   OF   GERMANY'S 
RECENT   INDUSTRIAL    PROGRESS 

CHAPTER   I.  —  INTRODUCTION.     INDUSTRIAL 
PROGRESS   IN   GENERAL 

Scope  of  the  work  defined.  —  An  outline  of  the  main  points 
of  modern  industrial  development:  Change  in  political 
and  economic  ideas  and  institutions;  improvement  of  the 
technique  of  industry  as  the  consequence  of  progress  in 
the  natural  sciences;  increase  of  population    ....   1-13 

CHAPTER   II.  — ECONOMIC    CONDITIONS   IN 
GERMANY    BEFORE    1871 

Causes  of  the  backwardness  of  German  industry:  Exposure 
to  the  devastation  of  war;  survival  of  mediaeval  institutions, 
especially  in  agriculture,  until  far  into  the  nineteenth  cen- 
tury; the  limited  markets  for  industrial  products  by  rea- 
son of  the  lack  of  political  unity  among  the  States;  trade 
restrictions;  expensive  transportation  facilities. — Meagre 
banking  facilities 14-27 

CHAPTER   III.— THE   PROGRESS   OF   GERMANY 
SINCE    1871 

Growth  of  population  and  shifting  of  occupations. — The 
rapid  expansion  of  the  home  relative  to  the  foreign  mar- 
ket. —  Growth  of  the  railway  system.  —  Foreign  com- 
merce.—  The  change  from  a  grain-exporting  to  a  grain- 
importing  country.  —  Statistics  of  foreign  trade.  —  Trade 
with  the  United  States.  —  Shipping 28-50 


viii  CONTENTS 

CHAPTER   IV.  — GROWTH    OF   THE   VARIOUS 
INDUSTRIES 

The  iron  and  steel  industry  (map),  —  Mining.  —  The 
machine  industry.  —  The  chemical  industry.  —  The 
textile  industry.  —  Agriculture.  —  The  development  of 
industrial  organization 51-73 


PART   TWO— THE   CAUSES 

CHAPTER   v.  — THE   INDUSTRIAL   CAPACITY 
OF   THE    GERMAN 

Plurality  of  causes  of  the  recent  industrial  progress  of  the 
German  Empire.  —  The  characteristics  of  the  German 
people:  Physical  vigor  and  fecundity;  effect  on  industrial 
development. — The  law-abiding  character  of  the  German. 

—  The  economic  effect  of  the  military  system  on  the  char- 
acter of  the  people. — The  one-year-army-service  certifi- 
cate. —  The  Pflichtgefiihl  of  the  German.  —  Capacity  to 
organize  and  cooperate.  —  Capacity  for  invention.  — 
Capacity  for  finance. —  The  important  role  of  the  Jew. 

—  Aptitude  of  the  German  merchant  in  adapting  him- 
self to  the  needs  of  commerce 74-93 

CHAPTER  VI.  —  INDUSTRIAL  EDUCATION 

The  German  idea  of  "Stand.'" — Thorough  education  as 
one  of  the  most  important  causes  of  the  recent  indus- 
trial progress.  —  System  of  general  education.  —  The 
"Continuation-schools"  {Fortbildungschulen).  —  The 
industrial  and  technical  schools.  —  The  commercial 
schools 94-109 

CHAPTER  VII.  — THE  GERMAN  WORKINGMAN 

Comparative  wages  not  a  good  index  of  the  economic  and 
social  condition  of  the  working  class  nor  to  the  cost  of 
labor  in  different  countries.  —  Wage-tables  showing  the 
fluctuation  of  wages  during  the  last  twenty-five  years.  — 


CONTENTS  ix 

The  condition  of  the  German  workingman :  slower  rate  of 
labor.  —  Lack  of  extremes  in  Germany.  —  Drinking  and 
gambling  less  among  the  German  working  classes.  — 
Contentedness  of  the  German  workingman;  less  opportu- 
nity to  rise,  but  at  the  same  time  less  chance  of  misfortune. 
—  The  influence  of  the  government  on  the  welfare  of  the 
working  class.  —  Factory-legislation.  —  Trades-unions.  — • 
Insurance  of  workingmen  against  sickness,  accident,  and 
infirmity  and  old-age.  —  Housing 110-136 

CHAPTER   VHI.  —  CONCLUSION 

The  problem  of  the  increase  of  population;  the  necessity  for 
marketing  manufactured  goods  abroad  to  pay  for  the  im- 
ports of  food-stuffs  and  raw  materials.  —  The  necessity 
for  a  strong  navy.  —  What  the  United  States  may  learn 
from  Germany :  national  self-conceit.  —  Honesty  in  offi- 
cial life  and  respect  for  law.  —  The  close  relation  between 
science  and  practical  affairs,  both  in  industry  and  govern- 
ment.—  The  "  American  Invasion  " 137-147 


BIBLIOGRAPHY 

SoMBART,  Werner.  Die  Deutsche  Volkswirtschaft  im  XIX. 
Jahrhundert.  Berlin:  Georg  Bondi.  1903.  Contains  an  im- 
mense amount  of  information  and  develops  many  interesting 
theories  which  are  presented  in  a  most  charming  manner. 

SoMBART,  Werner.  Die  Moderne  Kapitalismus.  Two  vols. 
Leipzig:  Dunker  &  Humblot.  1902.  One  of  the  most  impor- 
tant economic  writings  of  recent  times. 

Martin,  Rudolph.  Die  Eisen  Industrie  in  ihrem  Kampf  um 
den  Absatzmarkt.  Leipzig:  Dunker  &  Hiunblot,  1904. 
Discusses  the  development  of  the  iron  industry  and  attributes 
its  growth  to  the  protective  tariff. 

HuBER,  Dr.  F.  C.  Deutschland  als  Industrie  Staat.  Stuttgart: 
J.  G.  Cotta.    1901. 

Von  Halle,  Ernst.  Volks-  und  Seewirtschaft.  Two  vols. 
Berlin:  Siegfried  Mittler  &  Sohn.  1902.  Discusses  the  foreign 
economic  relations  of  the  German  Empire. 

Handbuch  der  Wirtschaftskunde  Deutschlands.  Four 
vols.  Leipzig:  B.  G.  Teubner,  1904.  A  compilation  by  many 
writers  on  the  various  German  industries.  Published  for  the 
Deutsche  Verband  fiir  das  kaufmdnnische  Unterrichtswesen, 
for  the  instruction  of  teachers  in  the  commercial  schools. 

Pohle,  Ludwig.  Die  Entwickelung  des  Deutschen  Wirt- 
schaftslebens  im  XIX.  Jahrhundert.  Leipzig:  B.  G.  Teubner. 
1904.  Pp.  132.  Sammlung:  "Aus  Natur  und  Geisteswelt." 
A  series  of  lectures  touching  the  main  points  in  the  economic 
history  of  Germany  during  the  past  century. 

Publications  op  the  Vereine  fur  Socialpolitik.  1873-1905. 
Leipzig:   Dunker  &  Humblot. 

Blondel,  Georg.  L'Essor  Industriel  et  Commercial  du 
Peuple  Allemande.  Paris:  Larose  &  Cie.  1898.  Second 
edition,  400  pp.  1899.  Criticised  by  Professor  von  Halle  in 
Schmoller's  Jahrbuch,  Bd.  XXII,  p.  1050. 

Ashley,  W.  J.    The  Progress  of  the  German  Working  Classes 


THE  CAUSE  AND  EXTENT  OF  THE 
RECENT  INDUSTRIAL  PRO- 
GRESS OF  GERMANY 

CHAPTER   I.  —  INTRODUCTION 

INDUSTRIAL   PROGRESS    IN   GENERAL 

It  is  the  purpose  of  the  present  work  to  describe  and  ac- 
count for  an  industrial  development  which  at  first  thought 
seems  most  extraordinary.  The  development  of  the  United 
States  has  of  course  been  more  rapid ;  but  to  one  familiar 
with  the  immense  natural  resources,  the  favorable  sit- 
uation, and  the  rapid  increase  of  a  population  charac- 
terized by  great  energy  and  enterprise,  of  "this  land  of 
unlimited  possibilities"  (to  use  a  phrase  which  has  re- 
cently caught  the  fancy  of  the  Germans  and  is  constantly 
in  their  mouths),  the  industrial  expansion  of  the  United 
States  seems  quite  natural  and  easily  explained. 

Not  so  in  Germany. 

Germany  is  an  old  country,  and  for  several  centuries 
her  people  have  been  poor  among  civilized  nations.  The 
fertility  of  her  soil  is  generally  far  below  that  of  neigh- 
boring territories,  and  her  silver  mines  were  long  since 
practically  exhausted.  Her  situation  is  such  that  she  has 
been  in  constant  danger  of  war  within  her  own  territo- 
ries, a  danger  which  has  compelled  her  to  maintain  a 
most  expensive  army.  Her  population,  until  within  the 
last  fifty  years,  has  been  predominantly  agricultural,  and 
has  had  a  reputation  for  unprogressiveness  and  lack  of 
enterprise.    All  these  circumstances,  as  well  as  the  char- 


g         INDUSTRIAL   PROGRESS   OF   GERMANY 

acter  of  the  government  itself  and  of  German  social  in- 
stitutions, which  have  placed  so  many  restrictions  on 
individual  freedom,  might  seem  almost  to  justify  the  anti- 
thetical description  of  Germany  as  "  the  land  of  impos- 
sible limitations." 

That  a  nation  so  handicapped  should,  in  the  last  third 
of  the  century,  exhibit  a  development  which  is  in  many 
respects  comparable  to  that  of  the  United  States,  —  a 
development  which  has  enabled  her  completely  to  sur- 
pass all  her  continental  competitors,  and  which  has 
alarmed  Great  Britain,  so  long  undisputed  in  her  sway 
over  the  world's  commerce,  —  is  a  phenomenon  well 
worth  studying. 

Professor  Schmoller  describes  the  change  which  has 
taken  place  in  Germany  in  the  following  language:  — 

"A  hundred  years  ago,  a  poor  country  of  peasants  and  handi- 
craftsmen, thinkers  and  poets,  divided  into  several  hundred  weak 
and  small  States ;  to-day,  a  great,  unified,  powerful  Empire,  whose 
prosperity,  great  industries,  and  technique,  whose  army  and 
bureaucracy,  Constitution  and  free  government,  and  whose  power 
and  strength  are  appreciated  far  beyond  her  frontiers." 

What  is  the  extent  of  this  remarkable  development; 
and  what  have  been  the  chief  causes  at  work  ? 

It  is  a  commonplace  to  remark  that  the  only  laboratory 
available  to  the  student  of  the  social  sciences  is  social 
experience  past  and  present ;  he  cannot  artificially  iso- 
late his  phenomena  for  the  purpose  of  studying  cause 
and  effect,  but  must  trace  out  these  relations  amid  all  the 
complexities  of  life  as  he  finds  it.  If,  therefore,  in  the 
present  study  we  are  able  to  determine  a  few  relations 
of  cause  and  effect  in  this  typical  industrial  community, 
the  results  may  help  to  a  solution  of  our  own  problems 
in  America. 

Industrial  progress  has  been  made  by  civilized  coun- 
tries in  various  forms  and  at  very  different  rates,  but  the 
history  of  all  shows  a  rough  uniformity  of  development 


INDUSTRIAL   PROGRESS   IN   GENERAL  3 

following  certain  general  principles.  Before  beginning 
the  study  of  one  of  these  countries,  it  will  therefore  be 
advantageous  to  review  briefly  these  general  principles 
of  industrial  development,  and  thus  to  get  an  outline  by 
which  to  guide  us  in  our  further  discussion.  In  this  way 
principles  and  tendencies  which  are  general  may  be  dis- 
tinguished from  those  which  are  peculiar  to  Germany 
alone. 

We  shall  use  the  word  "industry"  as  a  general  term  to 
cover  the  production  and  exchange  of  goods;  in  other 
words,  the  extraction  of  raw  materials  from  the  earth, 
their  elaboration  into  goods  suited  to  human  needs,  and 
their  transportation  to  the  locality  where  they  are  to  be 
consumed.  This  includes  the  activities  of  agriculture, 
forestry,  fishing,  mining,  manufacturing,  and  commerce. 
Industrial  progress  means,  therefore,  increase  in  amount 
of  goods  produced  and  transported,  and  improvement  of 
methods  by  which  this  increased  production  is  accom- 
plished. 

Three  fundamental  facts  underlie  the  industrial  de- 
velopment of  all  countries  during  the  nineteenth  cen- 
tury. 

1.  A  radical  change  in  political  and  economic  ideas 
which  has  manifested  itself  in  altering  social  institu- 
tions. 

2.  An  improvement  in  the  technique  of  production  and 
exchange,  accompanied  by  the  accumulation  and  employ- 
ment of  large  masses  of  capital. 

3.  An  increase  in  the  density  of  population  in  civilized 
countries. 

The  end  of  the  eighteenth  century  and  the  beginning  of 
the  nineteenth  saw  a  general  revolt  against  the  system 
of  industrial  restrictions  which  had  come  down  from 
mediaeval  times.  The  French  Revolution  and  the  publi- 
cation of  Adam  Smith's  "Wealth  of  Nations"  are  two 
events  which  mark  this  change.    In  former  times  it  had 


4         INDUSTRIAL   PROGRESS   OF   GERMANY 

been  thought  necessary  for  the  government  or  its  repre- 
sentative, the  guild,  to  interfere  in  all  economic  activities, 
and  to  make  minute  prescriptions  for  the  regulation  of 
industry.  This  came  about  largely  because  statesmen 
and  rulers  had  no  conception  of  the  principle  of  free  com- 
petition as  a  sufficient  regulator  of  economic  conduct, 
vi^hile  many  sovereigns  regarded  their  dominions  simply 
as  sources  of  revenue  for  the  crown.  The  efforts  of  the 
most  far-sighted  rulers  were  directed  to  preserving  and 
improving  sources  of  royal  income. 

These  industrial  limitations  and  restrictions  of  mediaeval 
times  probably  did  not  press  so  hard  upon  the  people 
as  we  are  likely  to  imagine;  theirs  was  an  age  of  status, 
and  it  was  thought  proper  and  necessary  that  a  person's 
economic  means  should  correspond  to  his  social  position. 
The  fundamental  idea  of  industry  was  livelihood  rather 
than  gain.  Accordingly  the  effort  was  made  to  put  every 
member  of  society  in  the  way  to  secure  a  livelihood  suited 
to  his  social  position,  and  to  prevent  other  people  from 
interfering  with  him.  The  guild  regulations  aimed  just 
as  much  to  protect  the  individual  in  his  business  as  to 
hinder  him  from  enlarging  it. 

It  was  only  when  the  masters  attempted  to  gain  an 
undue  advantage  and  to  make  their  monopoly  oppressive, 
and  only  when  industry  had  begun  to  take  on  a  capitalis- 
tic form  in  consequence  of  a  growing  commerce  and  the 
invention  of  technical  improvements  in  production,  that 
the  regulations  came  to  be  regarded  as  evils. 

The  relations  between  landlord  and  peasant  had  been 
well  adapted  to  the  conditions  of  the  time  which  saw  their 
introduction,  but  they  gradually  degenerated  until  they 
became  little  else  than  those  of  master  and  slave,  and 
economic  progress  demanded  their  abolishment. 

In  those  pre-capitalistic  times,  agriculture  was  the 
basis  of  economic  life,  and  other  industries  were  carried 
on  mainly  as  being  subsidiary  thereto.    The  peasant  sup- 


INDUSTRIAL   PROGRESS   IN   GENERAL  6 

plied  nearly  all  his  needs  from  the  land  on  which  he  lived, 
he  and  his  family  producing  for  their  own  consumption. 
What  limited  need  he  had  for  manufactured  goods  was 
satisfied  by  the  products  of  household  industry,  except 
in  the  few  cases  in  which  special  skill  or  more  elabo- 
rate tools  than  he  possessed  were  required.  Pottery  and 
blacksmithing  were  the  important  trades  which  had  an 
existence  independent  of  agriculture.  In  the  earlier  com- 
munities the  smith  and  the  potter  received  from  the  other 
members  certain  regular  amounts  of  provisions,  the  amount 
of  the  contribution  assessed  on  each  member  depend- 
ing on  the  size  of  his  holding.  Even  after  the  workman 
came  to  be  paid  for  the  specific  service  performed,  it  was 
frequently  the  custom  for  the  customer  to  furnish  the  raw 
material. 

When  each  little  community  was  practically  self-suf- 
ficing, there  was  naturally  little  commerce.  What  little 
traffic  was  able  to  surmount  the  difficulties  of  transporta- 
tion consisted  in  goods  of  a  very  high  value  in  small  bulk, 
or  in  such  exotic  products  as  indigo,  sugar,  spices,  and 
silks. 

The  production  of  articles  for  this  small  trading,  do- 
mestic and  foreign,  gave  rise  to  a  certain  amount  of 
specialized  industry,  which  concentrated  itself,  epecially 
in  Germany,  in  the  towns.  The  exchange  of  goods  took 
place  at  certain  specified  places  and  times,  which  were 
called  fairs.  Textiles  formed  the  great  bulk  of  this  com- 
merce, and  it  was  in  the  spinning  and  weaving  industries 
that  the  capitalistic  form  earliest  appeared. 

Properly  to  understand  the  economic  life  of  that  time, 
one  must  keep  constantly  in  mind  the  fact  that  the  indus- 
try was  carried  on  without  any  considerable  investment 
of  capital,  and  that  it  involved  little  else  than  the  per- 
sonal skill  of  the  workman.  The  relative  importance  of 
the  material  element,  capital,  and  the  human  element, 
manual  dexterity,  was  exactly  the  reverse  of  their  impor- 


6         INDUSTRIAL   PROGRESS   OF   GER]\L\NY 

tance  as  we  are  accustomed  to  think  of  them  to-day. 
Under  these  circumstances,  it  was  natural  that  personal 
relations  should  have  more  prominence  than  property 
relations. 

All  those  engaged  in  the  several  industries  were  organ- 
ized in  guilds,  governed  by  the  master- workmen.  They 
determined  in  minute  detail  when,  where,  and  at  what 
price  the  raw  materials  and  the  finished  goods  should 
be  bought  and  sold,  and  how  they  should  be  made.  They 
guarded  the  interests  of  the  producers  by  rules  which 
restricted  competition  in  buying  materials,  and  which 
limited  the  number  of  workmen  in  the  trade;  they  pro- 
tected the  interests  of  the  consumers  by  regulations 
regarding  the  quality  and  price  of  finished  goods.  Ori- 
ginally, the  guilds  were  designed  to  guard  the  public 
weal,  and  it  was  only  later  that  they  were  used  to  advance 
narrow  class  interests. 

The  expansion  of  commerce  and  the  opening  up  of  new 
markets,  together  with  the  improvement  in  technique, 
made  the  guild  system  obsolete.  As  soon  as  man  began  to 
make  a  systematic  study  of  natural  phenomena,  and  thus 
to  learn  the  secret  of  natural  forces,  he  was  prepared  to 
employ  them  in  his  service.  The  epoch-making  discov- 
eries and  inventions  of  the  latter  half  of  the  eighteenth 
century  may  trace  their  origin  back  to  the  laboratories 
of  the  natural  philosophers,  who  had  little  idea  of  the 
practical  results  which  would  come  from  their  studies  in 
science. 

To  make  use  of  this  newly  acquired  power  over  natural 
forces  required  machinery,  or  in  other  words,  capital,  and 
the  persons  who  possessed  these  machines,  the  capitalists, 
had  control  of  these  new  forces.  With  the  advent  of  the 
machine  and  capital,  there  came  a  revolution  in  the  man- 
ner of  conducting  industry;  the  idea  of  gain  replaced  the 
idea  of  earning  a  mere  livelihood.    The  simple  possession 


INDUSTRIAL  PROGRESS   IN   GENERAL  7 

of  capital  came  to  be  as  much  a  source  of  gain  as  labor 
and  skill. 

With  a  broader  market  stimulating  him  to  increased 
production,  and  with  the  need  of  more  capital  (to  enable 
him  to  extend  operations  and  to  exploit  the  new  inventions), 
forcing  him  to  earn  and  to  save  beyond  the  requirements 
of  the  mere  sustenance  of  himself  and  family,  the  indus- 
trial master-workman  underwent  a  fundamental  change 
in  his  ideas,  and  became  transformed  into  the  capitalistic 
entrepreneur. 

The  restrictions  put  upon  industry  in  the  form  of  guild 
ordinances  were  advantageous  to  the  producer  under 
the  handicraft  system.  The  amount  of  his  output  was 
naturally  limited,  and  he  was  willing  to  submit  to  regu- 
lations which,  if  they  pressed  upon  him  at  times,  yet 
more  than  compensated  him  by  the  protection  which  they 
gave  to  his  business.  If  they  prevented  him  from  extend- 
ing his  operations,  they  at  the  same  time  also  shielded 
him  against  competition  and  assured  him  a  living.  The 
capitalistic  producer,  on  the  other  hand,  was  limited  in 
his  productive  capacity  only  by  the  amount  of  capital 
he  could  control,  and  was  naturally  anxious  to  increase 
that  capital  as  rapidly  as  possible.  Since  he  was  stronger 
in  competition  than  his  handicraft  rivals,  the  regulations 
which  prevented  competition  hindered  rather  than  helped 
him.  Capitalism  was  therefore  the  opponent  of  industrial 
restriction. 

At  the  same  time  these  changes  were  occurring,  the 
political  ideas  of  the  people  were  taking  a  new  direction. 
The  revolutionary  theories  of  equality  and  the  natural 
rights  of  man  were  adopted  by  the  founders  of  the  new 
science  of  political  economy,  and  gave  aid  to  the  forces 
of  capitalism  in  abolishing  the  old  restrictions. 

The  mastery  of  natural  forces  which  was  attained  in 
manufacturing  was  also  attained  in  transportation,  and 


8         INDUSTRIAL   PROGRESS   OF   GERMANY 

efTected  changes  which  promoted  the  industrial  revolu- 
tion. The  locomotive  and  the  steamboat  enabled  the 
cheaply  produced  machine  products  to  be  distributed 
widely  and  to  satisfy  the  demand  of  large  areas.  Hence 
arose  the  extensive  specialization  of  industry  in  particular 
localities  of  the  state  and  in  particular  states  of  the  earth. 
England  became  the  foremost  manufacturing  and  com- 
mercial nation  of  the  earth,  and  the  economists  of  the  first 
half  of  the  nineteenth  century  looked  forward  to  still 
greater  national  specialization.  The  Free-trade  theories 
of  the  classical  economists  and  the  acceptance  of  these 
theories  in  legislation  reflected  the  ideas  of  the  jjeriod.  Eng- 
land looked  forward  confidently  to  the  time  when  all 
nations  would  accept  her  commercial  policy,  but  the  eco- 
nomic history  of  the  past  fifty  years  shows  how  ill  founded 
were  these  expectations.  National  interests  seemed  to  the 
statesmen  of  other  countries  to  dictate  a  different  policy, 
and  the  protective-tariff  laws  of  the  period  from  1875  to 
1885  had  the  appearance  of  a  concerted  action  on  the  part 
of  Germany,  Austria-Hungary,  France,  Russia,  Sweden, 
and  the  United  States  of  America,  against  England,  to 
prevent  the  national  specialization  of  industry.^ 

So  far  from  realizing  her  ambition  to  become  the  manu- 
facturing nation  for  the  world,  England  has  been  forced 
in  the  last  few  years  to  consider  a  protective  tariff  to 
protect  her  own  domestic  market  against  foreign,  espe- 
cially German,  competition! 

The  figures  given  below  show  the  decline  of  England's 
export  trade  relative  to  the  population.  This  is  decidedly 
marked  after  the  period  1870-1874,  notwithstanding  the 
great  improvement  and  cheapening  of  transportation  facil- 
ities, which  in  the  absence  of  counter-tendencies  should 
have  caused  the  expansion  of  this  trade. 

*  Rudolph  Martin,  Die  Eisenindustrie  in  Ihrem  Kampf  um  den  Alh 
satzmarkt,  chap.  iv.    Leipzig:  Dunker  &  Humblot,  1904. 


INDUSTRIAL   PROGRESS   IN   GENERAL 

THE   EXPORT    OF    BRITISH    PRODUCTS    FROM   GREAT 


BRITAIN  * 

Amount  per  capita 

of  population 

Year 

Annual  average 

1854 

£3 

10s. 

Od. 

1855-1859 

4 

2 

3 

1870-1874 

7 

7 

3 

1880-1884 

6 

13 

0 

1885-1889 

6 

3 

7 

1890-1894 

6 

2 

10 

1895-1899 

5 

19 

0 

1900 

6 

17 

3 

1902 

6 

13 

3 

That  specialization  in  the  sphere  of  industry  which 
has  been  so  obstructed  nationally  by  the  commercial  pol- 
icies of  different  governments  has  gone  on  unhindered, 
within  the  nations  severally,  among  the  working  popula- 
tion. Division  of  labor  has  so  important  an  effect  on  the 
cheapening  of  production  that  it  becomes  a  tendency 
of  irresistible  force,  especially  in  a  nation  competing  in 
the  world  markets.  The  development  of  machine  industry 
brings  with  it  the  ever-increasing  subdivision  of  labor,  and 
the  task  of  the  individual  workman  becomes  ever  more 
circumscribed  and  specialized. 

The  power  of  France  in  the  seventeenth  and  eighteenth 
centuries  was  derived  in  large  measure  from  her  agricul- 
tural resources,  while  in  the  nineteenth  century  the  might 
of  England  was  based  to  a  large  extent  on  her  wealth 
of  iron  and  coal.  The  use  of  these  minerals  in  mod- 
ern economic  life  is  a  fundamental  feature  of  industrial 
development  during  the  nineteenth  century.  Coal  and 
iron  have  become  the  indispensable  means  by  which  man 
applies  his  knowledge  of  natural  forces  to  industrial 
ends. 

Production  has  been  enormously  cheapened,  but  has 
become  at  the  same  time  vastly  more  complicated  and 
highly  organized;  the  connection  between  production  and 

•  British  Foreign  Trade  and  Industry,  prepared  in  the  Board  of  Trade, 
p.  403.    London :  Eyre  &  Spottiswoode,  1903. 


10       INDUSTRIAL   PROGRESS   OF   GERMANY 

consumption  has  become  indirect  and  uncertain,  the  indi- 
vidual has  lost  his  power  of  producing  for  his  own  needs, 
and  has  been  forced  to  find  his  place  in  the  organized 
system. 

The  most  recent  economic  development  is  the  mani- 
festation of  a  persistent  tendency  in  the  direction  of 
further  organization.  As  already  noted,  modern  capital- 
istic industry,  aided  by  the  political  philosophy  of  "natu- 
ral rights,"  broke  through  the  bonds  of  mediaeval  regula- 
tion, and  attained  economic  freedom  under  the  principle 
of  free  competition  as  the  sufficient  regulator  of  values 
and  economic  relations.  Beyond  a  certain  point,  however, 
organization  of  industry  tends  to  make  free  competition 
impossible,  and  it  becomes  necessary  to  return  to  the  prin- 
ciple of  social  regulation,  or  to  devise  some  new  regulator 
of  values. 

Free  competition  is  impossible  unless  there  is  some 
sort  of  equality  among  competitors,  and  the  condition 
of  equality  is  one  which  has  never  existed  since  capital 
came  to  play  a  leading  part  in  industry,  and  one  which  is 
becoming  more  impossible  as  industry  becomes  more 
highly  organized.  Not  only  do  men  as  individuals  differ 
in  economic  strength,  but  they  have  the  power  of  forming 
associations  which  may  act  as  industrial  units,  severally 
many  times  stronger  than  the  individuals  creating  them. 
The  organization  of  capital  which  has  developed  so  rapidly 
in  the  recent  past  tends  to  destroy  whatever  of  competi- 
tive equality  formerly  existed;  the  great  capitalistic  cor- 
porations and  syndicates  are  in  position  to  exterminate 
the  economically  weaker,  and  to  enter  into  competitive 
wars  with  the  stronger  concerns  until  one  or  the  other  is 
vanquished.  This  is  exactly  what  has  happened  in  the  last 
fifteen  years  in  those  industries  which  adapt  themselves 
most  easily  to  large  organization.  One  may  mention  in 
this  connection  the  industries  producing  sugar,  petroleum, 
rubber,  and  steel. 


INDUSTRIAL   PROGRESS   IN   GENERAL         11 

As  long  as  the  market  continues  to  expand  as  fast  as 
the  organization  of  industry,  the  competing  companies  are 
content  to  Uve  and  let  live,  but  as  soon  as  the  capacity 
for  production  exceeds  the  demand  of  the  markets,  the 
war  of  competition  begins,  and  continues  until  the  weaker 
has  succumbed,  or  a  syndicate  has  been  organized,  which 
means  that  all  the  companies  are  practically  consolidated 
into  one  having  full  control  of  the  market.  Competition 
has  come  to  an  end,  not  in  a  fortuitous  manner,  but  as  the 
result  of  an  economic  tendency  worked  out  to  its  inevita- 
ble conclusion.  Domestic  competition  being  destroyed, 
the  only  regulator  of  values  remaining  is  competition  from 
foreign  sources,  the  effect  of  which  may  be  largely,  some- 
times entirely,  nullified  by  high  protective  tariffs,  or  by 
agreements  between  the  syndicates  of  different  countries; 
foreign  competition  failing,  the  community  must  depend 
upon  the  law  of  monopoly  price,  or  upon  control  by  the 
state  for  the  regulation  of  values. 

An  important  factor  in  the  industrial  development  of  the 
nineteenth  century  has  been  the  rapidly  increasing  density 
of  populations  in  industrial  countries.  There  seems  to  be  a 
rough  coincidence  in  civilized  countries  between  the  rate  of 
increase  of  population  and  the  rate  of  industrial  progress. 
The  following  table  gives  percentage  increase  annually  of 
populations  in  the  various  countries  during  the  last  census 
period :  *  — 

United  States  1-89%  Great  Britain  .94% 

German  Empire  1.50  Spain  .88 

Netherlands  1.23  Italy  .69 

European  Russia  1.12  France  .17 

Belgium  1.01 

European  Russia  and  Spain  seem  to  occupy  positions 
in  this  series  quite  out  of  proportion  to  the  rate  of  indus- 

*  Statistisches  Jahrbuch  fur  das  Deutsches  Reich,  1904,  Anhang,  p.  3. 


12       INDUSTRIAL  PROGRESS   OF   GERMANY 

trial  progress,  but  in  both  cases  there  are  political  facts 
which  easily  account  for  the  discrepancy. 

Whether  increasing  density  of  population  is  cause  or 
effect  of  industrial  progress  is  difficult  to  determine.  It 
is  probably  true  that  a  period  of  prosperity  is  usually  fol- 
lowed by  an  increase  of  population,  and  thus  the  increase 
of  population  seems  to  be  the  effect;  but  it  may  like- 
wise be  true  that  crowding  of  population  upon  the  re- 
sources of  a  country  may  compel  its  inhabitants  to  devise 
technical  improvements  to  increase  production,  or  to  adopt 
sooner  than  they  otherwise  would  do,  the  inventions  of 
other  nations.  Railroads,  for  instance,  are  more  likely  to 
be  built  where  the  population  is  dense  than  where  it  is 
sparse,  and  the  building  of  railroads  is  in  itself  a  cause 
of  development  in  other  lines  of  industry. 

Increasing  density  of  population  is  therefore  easily  con- 
ceived to  be  at  the  same  time  both  cause  and  effect  of 
industrial  progress.  A  period  of  prosperity  will  ordinarily 
be  followed  by  an  increase  in  the  birth  rate,  while  the 
pressure  upon  the  natural  resources  of  a  country  sup- 
porting a  dense  population  will  lead  to  more  strenuous 
industrial  effort,  and  will  offer  greater  inducement  to 
technical  advance. 

In  some  cases,  however,  when  density  of  population 
increases  the  supply  and  depresses  the  price  of  labor, 
improved  machinery  may  be  kept  out  by  the  resulting 
cheapness  of  the  labor  supply,  as  in  the  textile  industry  in 
Germany  fifty  years  ago.  Again,  very  small  landholdings 
and  intensive  cultivation  are  conditions  unfavorable  to  the 
introduction  of  agricultural  machinery. 

This  restatement  of  familiar  facts  may  serve  to  empha- 
size the  importance  of  technical  improvements  and  of 
capitalistic  organization  in  a  nation's  industrial  develop- 
ment. Further,  it  may  serve  to  emphasize  the  influence 
of  an  increasing  and  dense  population.  Finally,  it  will 
provide  an  outline  by  which  to  measure  the  progress  of 


INDUSTRIAL  PROGRESS   IN   GENERAL        13 

Germany  from  the  lower  to  the  higher  stages  of  indus- 
trial development,  and  may  aid  in  explaining  why  her 
development  seems  at  certain  times  to  have  been  ar- 
rested, and  at  others  to  have  proceeded  with  extraordi- 
nary celerity. 


CHAPTER   II 

ECONOMIC  CONDITIONS   IN  GERMANY  BEFORE   1871 

Until  nearly  the  close  of  the  nineteenth  century.  Great 
Britain  was  the  pioneer  in  the  industrial  development 
outlined  in  the  preceding  chapter.  That  country  took 
the  lead  in  making  a  practical  trial  of  the  laissez-faire 
doctrines  of  free  and  unrestrained  competition  as  the  nat- 
ural and  sufficient  regulator  of  all  economic  relations. 
Her  isolated  position  and  consequent  freedom  from  the 
ravages  of  war  within  her  own  territory  enabled  her  to 
accumulate  capital  and  to  embark  in  extensive  capitalis- 
tic enterprises.  The  country,  however,  suffered  a  disadvan- 
tage from  the  too  sudden  transition  from  the  handicraft 
to  the  factory  system  of  production,  and  the  period  of  the 
industrial  revolution  is  the  darkest  in  her  economic  his- 
tory. Other  countries,  following  more  leisurely  along  the 
same  road,  have  been  able  to  avoid  some  of  the  worst 
features  of  the  revolution.  With  reference  to  Germany, 
Professor  Sombart  says :  — 

"If  one  wants  to  be  quite  accurate,  one  must  always  add  this 
when  one  is  describing  the  position  of  the  German  workman: 
that  with  us  the  phenomena  of  poverty  have  not  made  their 
appearance  to  the  same  extent  or  with  the  same  acuteness  as, 
for  example,  in  England  and  France.  The  main  reason  for  this 
is  to  be  found  in  the  fact  that  capitalism  was  later  in  developing 
itself,  and  that  therefore  the  movement  of  reaction  against  the 
exploitation  of  the  workpeople  came,  comparatively  speaking, 
earlier  there.  .  .  .  The  portion  of  the  proletariat  has  in  its  main 
lines  resembled  that  elsewhere,  though  the  picture  has  never 
been  quite  so  black."  ^ 

*  Die  Deutsche  VolksioirtschaftimXIX.Jahrhundert,  p.  525.  Berlin: 
GeorgBondi.    1903. 


ECONO^nC    CONDITIONS   BEFORE    1871        15 

While  England  was  thus  blazing  the  trail  in  the  eco- 
nomic wilderness,  Germany  was  making  slow  progress. 
In  view  of  the  rapid  industrial  development  of  Germany 
during  the  last  twenty-five  years,  which  shows  that  this 
country  must  have  had  latent  powers  of  development  even 
while  in  so  backward  a  condition,  it  will  be  interesting  to 
search  for  the  causes  which  retarded  the  growth  of  the 
country  until  so  late  a  date.  If  we  are  able  to  discover 
the  retarding  influences  which  survived  so  long,  we  shall 
be  better  able  to  explain  the  great  progress  made  when 
these  were  removed. 

Probably  the  most  important  cause  of  Germany's  back- 
wardness was  her  geographical  position  in  the  centre  of 
Europe,  which  condemned  her  to  be  the  battle-ground 
of  the  Continent. 

Before  the  Thirty  Years'  War,  Germany  enjoyed  a  con- 
siderable prosperity.  To  be  assured  of  the  fact,  one  need 
only  remember  the  flourishing  trade  of  the  Hanse  cities, 
and  the  wealth  of  the  Fugger  family,  largely  drawn  from 
the  silver  mines  of  South  Germany.  The  war,  however, 
completely  extinguished  all  industrial  activity.  At  the 
close  of  this  dark  period  the  population  of  the  country 
had  been  reduced  more  than  one  half,  and  the  large  part 
of  this  half  was  composed  of  a  generation  of  men  either 
untrained  in  industrial  pursuits,  or  so  long  accustomed 
to  living  on  the  booty  of  war  as  to  be  entirely  unfit  for 
regular  industry.  Thousands  of  discharged  soldiers  wan- 
dered about  the  country,  begging,  or  despoiling  the  peas- 
ants by  virtue  of  legal  permits  (motatorien).  The  wealth 
of  the  country  had  been  almost  completely  destroyed.  Few 
horses  remained  to  meet  the  needs  of  agriculture  and 
transportation;  the  spade  replaced  the  plow  and  the  push- 
cart the  wagon. 

The  rate  of  interest  ranged  from  ten  to  thirty  per  cent, 
while  the  current  rate  in  Holland  at  the  same  time  was 
from  three  to  six  per  cent.  Land  had  sunk  to  one  fourth  of 


16       INDUSTRIAL   PROGRESS   OF   GERMANY 

its  former  value,  and  hundreds  of  thousands  of  houses 
had  been  burned.  The  important  industries  of  the  time 
—  brewing,  wine-pressing,  paper-making,  book-printing, 
wool-weaving  and  linen-weaving  —  had  entirely  ceased,  or 
led  a  most  precarious  existence.* 

Frugality  and  industry  no  longer  availed  to  secure  a 
livelihood,  but  in  their  stead  prevailed  craft,  force,  and 
deceit.  The  small  states  and  principalities  became  inde- 
pendent, and  isolated  themselves  from  one  another  by 
a  system  of  burdensome  taxes  and  customs  duties.  The 
petty  courts  struggled  to  keep  up  appearances  on  empty 
treasuries  by  exploiting  their  subjects. 

During  this  time  of  Germany's  deepest  degradation, 
England  was  extending  her  foreign  commerce  by  every 
means  in  her  power.  The  Navigation  Acts  of  Cromwell's 
reign  and  the  conquests  over  the  Dutch  from  1650  to  1713 
enabled  England  to  transfer  a  large  part  of  the  shipping 
of  the  Dutch  merchant  marine  to  her  own  vessels,  and 
to  monopolize  the  commerce  of  her  colonies  for  her  own 
advantage.  During  the  eighteenth  century  she  was  con- 
stantly extending  her  colonial  possessions  by  defeating 
the  French.  In  this  she  was  making  preparations  for  the 
future,  when  her  great  textile  and  iron  industries  should 
be  fostered  by  the  demand  of  this  huge  market.  Her 
commerce  also  brought  her  an  accumulation  of  capital, 
which  enabled  her  to  utilize  to  the  fullest  extent  the  ad- 
vantages of  capitalistic  production  when  the  machine  era 
arrived. 

The  Seven  Years'  War,  though  at  the  time  very  dis- 
astrous to  industry  and  commerce,  may  be  considered  as 
industrially  advantageous,  in  the  long  run,  to  the  German 
states,  since  it  gave  Prussia  a  commanding  place  among 
these  principalities.  The  results  of  the  rise  of  Prussia 
appear  in  the  course  of  the  next  century,  first  in  the  es- 

'  Gustav  Schmoller,  Grundriss  der  Allgemeine  Volksmrtschaftslehre, 
Zweiter  Teil,  p.  594.  Leipzig:  Dunker  &  Humblot.   1904. 


ECONOMIC    CONDITIONS    BEFORE    1871        17 

tablishment  of  the  Zollvereine,  then  of  the  North  German 
Confederation,  and  finally  of  the  German  Empire.  Had 
Austria  retained  the  headship,  the  industrial  as  well  as 
the  political  history  of  Germany  during  the  nineteenth 
century  might  have  been  vastly  difi^erent. 

The  Napoleonic  war  again  brought  destruction  to  the 
industries  and  wealth  of  the  land,  although  the  continen- 
tal blockade  gave  a  temporary  boom  to  some  branches, 
especially  the  textile  industry.  The  war  had  reduced  the 
country  to  such  poverty  that  the  recovery  took  many 
years.  Up  to  the  middle  of  the  century,  at  least,  the  lack 
of  capital  was  the  great  obstacle  to  industrial  development. 
Among  the  masses  of  the  people,  hunger  and  misery  were 
general  both  in  the  cities  and  in  the  country,  and  famine 
was  not  uncommon.  So  widespread  was  the  damage  that 
Professor  Sombart  writes:  ^  "I  believe  that  it  will  not  be 
amiss  to  assume  that  the  economic  condition  of  the  people 
was  lower  in  1830  than  in  1802,"  and  1830  is  fifteen 
years  after  the  conclusion  of  peace.  The  war  of  libera- 
tion, however,  brought  to  Germany  much  political  good, 
even  if  it  did  inflict  much  economic  damage  for  the  time 
being.  The  idea  of  German  unity  received  a  strong  im- 
pulse, which  was  to  grow  through  the  century.  The  num- 
ber of  independent  states  was  reduced  from  180  to  39, 
which  in  itself  was  a  long  step  in  advance. 

Although  the  Zollvereine  and  the  increase  of  popula- 
tion afforded  the  necessary  conditions  for  a  capitalistic 
development  before  1850,  yet  there  was  lacking  the  spirit 
of  enterprise.  Prices  of  all  articles  sank,  or  failed  to  rise 
from  their  former  level.  There  was  a  great  lack  of  money, 
for  the  currency  had  been  drained  away  to  pay  for  the 
excess  of  imports  over  exports.  The  English  and  French 
competition  was  so  keen  at  this  time  that  the  native  in- 
dustries had  small  chance  to  develop. 

The  later  wars  in  which  Prussia  has  been  engaged  have 
*  Die  Devische  Vdkswirtschaft  im  XIX.  JaJirhundert  p.  438. 


18       INDUSTRIAL   PROGRESS   OF   GERMANY 

been  of  short  duration,  and  have  been,  each  of  them,  steps 
in  the  direction  of  German  unity,  and  cannot  therefore  be 
considered  as  positively  disadvantageous  to  industry. 

During  the  first  two  or  three  decades  of  the  past  cen- 
tury, the  form  of  Germany's  economic  hfe  was  not  es- 
sentially different  from  that  of  the  preceding  centuries. 
Production  was  carried  on  both  in  agriculture  and  in  manu- 
facturing primarily  to  supply  the  needs  of  the  producers 
directly,  and  to  a  very  small  extent  only  for  the  markets. 
The  purpose  of  industrial  activity  was  sustenance,  not 
profit.  Before  the  need  for  capital  in  production  had 
created  the  idea  of  gain  for  the  purpose  of  saving  and  the 
employment  of  these  savings  in  further  production,  it  was 
considered  impolitic  to  allow  individuals  to  produce  more 
than  was  necessary  to  maintain  them  in  the  social  class 
to  which  they  belonged. 

Moreover,  each  of  the  petty  governments  maintained 
such  a  close  supervision  over  industrial  affairs  that  hardly 
a  pair  of  boots  could  be  made  without  its  cognizance. 
In  fact,  each  prince  regarded  the  industries  of  his  domain 
as  his  source  of  revenue,  and  regulated  them,  according 
to  his  ability,  in  a  near  or  far  sighted  manner.  This  close 
regulation  gave  rise  to  a  system  of  complicated  ordinances, 
premiums,  privileges,  etc.,  and  held  out  inducements  to 
foreign  craftsmen  to  settle  in  the  country. 

During  the  first  half  of  the  nineteenth  century,  the  coun- 
try was  predominantly  agricultural,  and  had  even  declined 
as  a  commercial  and  manufacturing  country  from  the 
point  reached  in  the  sixteenth  century,  when  the  eastern 
trade  routes  traversed  the  land  and  the  Hanse  cities  were 
the  centres  of  mediaeval  commerce. 

In  Prussia  in  1804,  73  per  cent  of  the  whole  population 
was  rural  and  27  per  cent  urban.  The  rural  population 
can,  without  qualification,  be  regarded  as  almost  wholly 
agricultural,  since  the  handicraft  industries  were  confined 
almost  exclusively  within  the  city  walls.     Of  the  27  per 


ECONOMIC   CONDITIONS   BEFORE    1871        19 

cent  urban  population,  moreover,  a  considerable  part  may 
also  be  reckoned  in  with  the  agricultural;  the  statistician, 
Dieterici,  declared  that  frequently  more  than  half  of  the 
city  population  derived  a  large  part  of  its  livelihood  from 
the  cultivation  of  the  soil.  Therefore  we  may  safely  as- 
sume that  over  80  per  cent  of  the  population  of  Germany 
at  the  beginning  of  the  past  century  was  agricultural. 
Many  of  the  places  which  were  in  the  possession  of  city 
rights  at  the  time  were  hardly  more  than  country  villages; 
Prussia  had  but  17  cities  of  over  10,000  inhabitants,  102 
with  from  3000  to  10,000,  502  with  from  1000  to  3000, 
and  383  with  less  than  1000. 

The  natural  resources  of  Germany  were  not  favorable 
to  agriculture,  and  in  that  age  when  agriculture  was  the 
basis  and  almost  the  whole  of  industry,  she  was  at  a  dis- 
advantage as  compared  with  her  neighbors.  Even  if  the 
wars  had  not  prevented  it,  the  accumulation  of  capital  out 
of  the  surplus  production  of  agriculture  would  have  been 
a  slow  process.  The  cultivators  of  the  soil  had  no  am- 
bition to  get  more  than  a  living  from  their  industry,  and 
even  to  this  day  the  capitalistic  idea  of  profit  has  made 
but  small  headway  in  agriculture. 

The  form  of  agriculture  has  such  an  important  bearing 
on  the  whole  industrial  system  of  Germany,  and  explains 
so  much  of  the  backwardness  of  that  country  during  the 
past  century,  that  it  is  worth  while  to  examine  it  some- 
what closely. 

The  usual  method  of  agriculture  in  early  times  in  Ger- 
many was  by  communities,  the  Mark  system.  In  its  ori- 
ginal form,  the  Mark  was  a  community  of  from  30  to  40 
families  living  together  in  a  village,  owning  and  cultivat- 
ing the  surrounding  land.  Each  family  possessed  a  share 
(Hufen)  of  the  whole  property  in  the  following  threefold 
manner:  1.  The  house,  barns,  and  garden,  together  with 
the  domestic  animals,  were  owned  by  the  individuals  as 
private  property.    2.  The  arable  land  was  divided  up  into 


20       INDUSTRIAL   PROGRESS   OF   GERIVIANY 

large  fields,  in  each  of  which  every  family  had  its  share  or 
parcel,  usually  an  area  as  large  as  a  yoke  of  oxen  could 
plow  in  a  forenoon,  hence  the  name  "Morgen."  Each 
family  owned  sometimes  as  many  as  a  hundred  of  such 
parcels  scattered  over  the  whole  Mark.  In  the  earliest 
times,  these  parcels  were  occasionally  redistributed  among 
the  families  of  the  community.  3.  Besides  the  arable  land, 
there  existed  meadows  and  forests  (Allemende)  within  the 
Mark,  in  the  use  of  which  members  had  certain  rights  of 
pasturage  and  fuel-gathering. 

This  system  of  scattering  the  holdings  of  the  members 
of  the  community  over  the  whole  Mark  for  the  purpose 
of  securing  equality  in  the  quality  of  the  holdings,  neces- 
sitated certain  regulations.  Since  no  person  could  reach 
any  particular  parcel  of  his  land  without  crossing  the 
land  of  his  neighbors  (there  being  no  roads  or  lanes  lead- 
ing to  it),  it  was  necessary  for  the  owners  of  the  parcels 
of  each  field  to  cultivate  the  same  crop,  to  sow  and  har- 
vest it  at  the  same  time  (Flurzwang),  to  avoid  interfering 
with  each  other's  operations.  Lacking  knowledge  of  the 
rotation  of  crops  and  of  the  use  of  fertilizers,  they  were 
forced  to  leave  the  field  lying  fallow  every  third  year. 

In  the  course  of  time,  this  primitive  organization  had 
become  altered,  and  the  peasants  fell  into  a  state  of  de- 
pendence on  the  lord  whose  lands  adjoined  or  were  scat- 
tered among  those  of  the  peasants.  It  was  in  East  Prussia, 
especially,  that  the  lord  came  to  have  the  greatest  power 
over  the  peasants;  in  the  West  the  peasant  retained  more 
of  his  old-time  independence.  The  obligations  of  the  peas- 
ants to  the  lord  took  the  form  of  enforced  service,  either 
in  the  form  of  hand  labor  or  labor  with  a  team  of  horses 
or  oxen,  for  a  certain  number  of  days  in  the  year,  natu- 
rally in  sowing  or  harvesting  time,  when  the  peasant  could 
least  well  afford  to  give  up  the  time.  These  obligations 
became  hereditary  and  bound  the  peasant  in  serfdom  to 
the  soil,  for  it  was  impossible  for  him  to  leave  as  long  as 


ECONOMIC   CONDITIONS   BEFORE    1871        21 

these  burdens  rested  upon  him,  and  there  was  no  way  by 
which  he  could  free  himself  from  them.  Until  well  into  the 
nineteenth  century,  this  species  of  servitude  lasted.  In 
Prussia  the  edicts  of  1807,  1811,  and  1816  provided  means 
for  the  emancipation  of  the  serfs.  This  tardiness  on  the 
part  of  the  German  States  in  adopting  reforms  which 
England  and  France  had  achieved  much  earlier  is  one  of 
the  causes  retarding  the  development  of  German  industry. 

The  form  of  landholding  which  necessitated  the  uni- 
form method  of  cultivation  (Flurzwang)  was  not  changed 
until  the  Prussian  law  of  1820  provided  a  way  by  which 
individual  holdings  could  be  assembled  in  one  consecu- 
tive area,  thus  permitting  the  owner  to  adopt  new  methods 
of  cultivation,  rotation  of  crops,  and  other  innovations  at 
will.  These  agrarian  reforms  were  carried  out  in  face  of 
opposition  by  the  lordly  proprietors,  and  only  after  many 
concessions  had  been  made,  which  put  heavy  burdens 
upon  the  emancipated  serfs  and  retarded  the  process  of 
change. 

Although  these  mediaeval  institutions  were  thus  abol- 
ished early  in  the  century,  the  form  which  they  gave  to 
agriculture  and  the  character  which  they  gave  to  the 
population  endured  long  after.  The  Flurzwang,  which 
compelled  each  member  of  the  community  to  cultivate  his 
land  in  the  same  manner  as  his  neighbors  to  avoid  mutual 
interference,  was  hostile  to  innovation.  No  change  could 
be  made  in  the  ancient  mode  of  conducting  agriculture 
unless  the  whole  community  were  willing  to  adopt  the 
new  method.  Such  an  obstacle  was  too  great  to  be  over- 
come even  by  the  hardiest  innovator;  the  peasants  had 
no  conception  of  any  method  different  from  the  one  which 
they  had  been  taught,  nor  had  they  any  ambition  to  at- 
tempt an  improvement,  and  the  innovator  stood  small 
chance  of  getting  anything  but  ridicule  for  his  pains. 

Conservatism  such  as  this,  fostered  for  centuries  by  the 
agricultural  system  and  touching  so  large  a  portion  of  the 


«2       INDUSTRIAL    PROGRESS   OF   GERMANY 

population  of  the  country,  could  scarcely  help  becoming 
the  predominating  trait  and  surviving  even  after  the  insti- 
tutions which  maintained  it  so  long  had  disappeared. 
In  Germany  the  peasant  clung  to  his  old  customs  as  long 
as  he  could,  but  the  increase  of  population  and  modern 
industrialism  were  forces  not  to  be  resisted.  The  land  be- 
came too  valuable  to  be  allowed  to  be  cultivated  in  the 
old  primitive  way,  and  the  peasant  who  could  not  adapt 
his  cultivation  to  the  new  methods  was  compelled  to  aban- 
don his  land  and  take  his  place  among  the  wage-earners. 
So  long  as  the  old  system  continued,  and  the  peasant 
could  support  himself  from  his  land,  buying  and  selling 
but  little  in  the  market,  German  industry  could  find  but 
a  narrow  home  market  for  its  products.  To  the  conserva- 
tism of  the  German  peasant,  fostered  by  the  early  agrarian 
system,  may  be  ascribed  much  of  the  backwardness  of 
German  industry  throughout  two  thirds  of  the  nineteenth 
century. 

In  East  Prussia,  where  large  estates  prevailed,  and 
where,  even  after  the  emancipation,  laborers  remained  in 
a  very  degraded  condition,  as  well  as  in  the  West,  where 
small  peasant-holdings  were  the  rule,  improvement  in 
technique,  introduction  of  labor-saving  machinery,  was 
slow.  Large  landholders  gave  too  little  personal  attention 
to  agriculture  and  were  very  incompetent  business  men, 
while  the  small  peasant-holder  had  little  opportunity  to 
learn  the  new  methods. 

Because  Germany  made  the  transition  from  a  handi- 
craft to  a  machine  and  factory  industry  so  late,  she  found 
many  hindrances.  The  competition  of  the  more  highly 
developed  countries,  especially  England,  was  a  formida- 
ble obstacle  for  the  manufacturer  to  face  so  long  as  the 
free-trade  policy  was  retained.  Handicraft  and  house 
industries  did  not  yield  easily  to  the  new  order  of  things, 
and  they  survive  even  to-day  in  some  parts  of  the  country; 
the  artisans  are  inclined  to  cling  to  their  craft  even  after 


ECONOMIC    CONDITIONS   BEFORE    1871        23 

it  has  failed  to  assure  them  an  income  sufficient  for  their 
needs. 

The  seriousness  of  the  displacement  of  these  artisans 
by  the  factory  arises  from  their  inability  to  adapt  them- 
selves to  the  changed  conditions.  The  natural  conserva- 
tism of  this  class,  with  their  ignorance  of  any  occupation 
except  the  one  in  which  they  have  passed  a  long  appren- 
ticeship, and  the  lack  of  opportunity  to  change  their  em- 
ployment leave  these  people  in  a  very  critical  position 
when  the  factory  deprives  them  of  a  means  of  livelihood. 
Very  often  the  nature  of  their  work  has  unfitted  them  both 
physically  and  mentally  for  anything  else.  In  a  country 
where  every  inch  of  ground  has  a  high  value,  they  have 
not  the  resource  of  turning  to  agriculture,  and  the  facto- 
ries which  have  superseded  them  may  be  in  a  distant  part 
of  the  country,  so  that  they  have  no  chance  to  become 
factory  workers. 

Trade  and  transportation  restrictions  aided  in  ob- 
structing the  new  and  maintaining  the  old  economic  sys- 
tems and  institutions  in  Germany.  Each  of  the  German 
States  before  the  Zollvereine  of  1833  was  a  foreign  nation 
to  the  others  as  far  as  trade  relations  were  concerned, 
and  even  so  late  as  1818  there  were  duties  to  be  paid  in 
sending  goods  from  one  province  to  another  within  the 
kingdom  of  Prussia.  Friedrich  List  compared  this  condi- 
tion to  a  human  body  whose  limbs  were  so  bound  with 
cords  that  the  blood  could  not  circulate  from  one  part 
to  another. 

The  first  requisite  to  large-scale  production  is  a  suf- 
ficiently large  market  for  the  products,  and  the  difference 
between  England  and  Germany  in  respect  to  market 
conditions  explains  much  of  the  difference  in  industrial 
development.  The  size  of  the  market  on  which  any  single 
local  industry  can  depend  is  determined  largely  by  the 
transportation  facilities.  The  insular  position  of  England, 
with  her  long  coast  line  and  numerous  harbors,  affording 


24       INDUSTRIAL   PROGRESS   OF   GERMANY 

cheap  transportation  between  her  own  ports  as  well  as  to 
foreign  countries,  contrasted  sharply  with  the  inland  posi- 
tion of  Germany.  No  point  in  England  is  more  than 
seventy-five  miles  from  the  sea,  and  none  is  very  much 
farther  than  that  from  one  of  the  eighty  harbors  on  the 
coast.  On  the  other  hand,  Germany's  limited  sea-coast 
could  afford  but  slight  assistance  to  domestic  and  foreign 
commerce,  except  in  articles  of  relatively  small  bulk,  and 
the  trade  in  these  was  confined  to  a  few  ports  and  the 
country  immediately  surrounding  them. 

The  two  great  German  harbors,  Hamburg  and  Bremen, 
were  outside  the  Zollvereine,  and  were  little  better  than 
foreign  ports.  Their  commerce  with  the  Scandinavian 
countries  and  Russia  was  more  important  than  the  com- 
merce with  the  German  States  of  the  interior. 

Rivers  and  canals  served  a  few  localities  with  cheaper 
transportation  than  that  of  horse  and  wagon;  but  before 
the  era  of  railroads,  the  lack  of  transportation,  in  addition 
to  the  onerous  trade  restrictions,  accounts  for  much  of 
Germany's  industrial  backwardness. 

England's  early  industrial  development,  on  the  other 
hand,  was  fostered  by  her  commerce,  which  provided  a 
wide  market  for  her  products,  especially  in  the  colonies 
settled  by  English  people  and  accustomed  to  the  con- 
sumption of  English  goods.  The  German  manufacturer 
had  no  such  market  for  his  wares.  The  home  market 
was  limited  to  a  small  area,  extended  somewhat  in  a 
few  cases  by  river  navigation.  But  even  here  commerce 
was  obstructed  by  guild  regulations,  which  forbade  vessels 
from  going  beyond  a  certain  point  and  thus  necessitating 
the  reshipment  of  cargoes.  In  addition  to  this,  verj'  high 
monopoly  rates  were  charged,  thus  making  transportation 
so  expensive  as  to  defeat,  in  large  measure,  its  purpose 
as  a  means  of  extending  markets. 

Having  no  colonies  and  little  shipping,  the  German 
States  could  naturally  have  no  policy  of  foreign  trade 


ECONOMIC    CONDITIONS   BEFORE    1871        25 

extension,  and  the  manufacturers  could  win  a  foreign 
market  only  with  the  greatest  difficulty. 

Another  obstacle  to  the  development  of  commerce  and 
industry  was  the  diverse  systems  of  weights,  coins,  and 
measures  of  the  various  states.  The  Zollvereine,  which 
abolished  all  tariff  duties  between  the  states,  provided 
for  the  introduction  of  uniform  weights,  coins,  and  mea- 
sures, but  these  things  were  accomplished  only  after  the 
formation  of  the  North  German  Confederation,  A  law 
was  passed  in  1868  which  introduced  the  metric  system, 
and  after  1872  its  use  was  made  compulsory  throughout 
the  empire. 

The  Zollvereine,  as  it  existed  from  1834  to  1867,  was 
not  a  complete  economic  unity.  There  was  still  lacking 
uniform  legislation  over  industry,  patents,  warehouses, 
indirect  taxes,  and  in  respect  to  other  matters.  Every 
new  law  or  change  in  an  old  one  required  the  unani- 
mous consent  of  all  the  members  of  the  Vereine,  and  the 
opposition  of  the  most  insignificant  state  could  defeat  the 
will  of  all  the  others. 

Such  restrictions  to  commerce  as  we  have  described 
were  most  unfavorable  to  the  development  of  wholesale 
factory  production,  and  explain  the  survival  of  the  handi- 
craft system  until  so  late  in  the  century.  When  the  re- 
strictions were  abolished  and  the  railroads  had  opened 
up  home  markets  to  the  German  manufacturer,  the  Eng- 
lish industries  had  so  cheapened  production  by  whole- 
sale manufacture  that  the  German  entrepreneur  could 
establish  himself  only  in  the  face  of  the  severest  compe- 
tition. 

One  of  the  most  necessary  conditions  in  the  organiza- 
tion of  industry  and  the  transition  from  handicraft  pro- 
duction to  the  capitalistic,  factory  production  is  a  sound 
and  effective  monetary  and  banking  system.  The  mod- 
em system  of  production  requires  not  only  an  enormous 
accumulation  of  capital,  but  also  a  means  by  which  this 


26       INDUSTRIAL   PROGRESS   OF   GERMANY 

capital  can  come  under  the  control  of  the  entrepreneurs; 
in  other  words,  a  credit  system.  The  most  inventive  and 
enterprising  minds  of  a  nation  are  not  usually  combined 
in  the  same  person  with  large  fortunes.  Since  either  enter- 
prise without  capital  or  capital  without  enterprise  is  like 
a  dissevered  pair  of  scissors,  a  way  must  be  provided  by 
which  they  can  be  united  before  they  can  be  effective  in 
industry.  To  gather  together  the  small  accumulations 
and  savings  of  the  community  so  that  they  can  be  avail- 
able to  the  entrepreneur  is  one  of  the  functions  of  a  bank; 
the  organization  of  industry  and  the  development  of 
banking  are  therefore  inseparable  phenomena. 

How  far  behind  England  and  the  United  States  was 
Germany  with  respect  to  her  banking  system  is  indicated 
roughly  by  the  following  statistics.  Mulhall  has  attempted 
to  estimate  the  "banking  power"  of  the  three  countries 
by  adding  together  the  total  capital,  right  of  issue,  and 
deposits  of  the  banks.  For  any  ordinary  purpose  such  a 
superficial  calculation  would  be  of  little  value,  but  it 
serves  us  here  by  indicating  the  enormous  inferiority  of 
Germany  in  respect  to  banking  facilities. 

BANKING  POWER  OF  ENGLAND,  THE  UNITED  STATES,  AND 
GERMANY;  INCLUDING  CAPITAL,  RIGHT  OF  ISSUE,  AND 
DEPOSITS 

{In  million  pounds  sterling) ' 

1840  1870  1888-1890 

Great  Britain                   £132  £720  £910 

Germany                               12  49  231 

United  States                       90  440  1030 

One  of  the  most  characteristic  features  of  modern  in- 
dustrial development  is  the  use  of  iron  and  steel  in  rail- 
road construction,  shipbuilding, manufacture  of  machinery, 
and  for  other  purposes.  The  consumption  of  raw  iron  is 
therefore  a  tolerably  good  index  of  the  industrial  status 
of  a  country  as  a  whole.  According  to  this  test,  Germany 
*  Mulhall,  Dictionary  of  Statistics,  p.  75. 


ECONOMIC   CONDITIONS   BEFORE    1871        27 

is  again  seen  to  be  far  behind  England  and  the  United 
States  up  to  1880. 

CONSUMPTION     OF     PIG-IRON    IN    ENGLAND,    THE     UNITED 
STATES,    AND    GERMANY,    PER   CAPITA   OF   POPULATION 

{Kilograms)  ^ 
1850  1860  1870  1880 

England  85  121.9  172.7  177.8 

United  States  30  31  51  89 

Gennany  10.6  18.6  38.8  69.8 

^  Martin,  Die  Eisen  Industrie,  p.  54. 


CHAPTER   III 

THE   PROGRESS   OF   GERMANY   SINCE   1871 

The  economic  history  of  Germany  during  the  nineteenth 
century  may  be  divided  into  three  periods :  the  first  begin- 
ning in  the  eighteenth  century  and  lasting  until  the  for- 
mation of  the  ZoUvereine  in  1833;  the  second  extending 
from  this  date  to  the  establishment  of  the  empire;  and  the 
third  comprehending  the  interval  since  1871  to  the  present 
time. 

The  first  period  is  marked  by  the  liberation  of  the  peas- 
ants from  feudal  serfdom,  by  agrarian  legislation,  and  by 
at  least  a  partial  realization  of  freedom  in  manufacturing 
and  commerce,  all  leading  to  a  nevs^  ordering  of  social  and 
economic  arrangements. 

In  the  second  period  we  see  the  rise  of  the  capitalistic 
system  of  production  made  possible  by  the  extension  of  mar- 
ket areas  following  the  abolition  of  tariff  obstacles  within 
the  German  States,  and  the  improvement  in  the  means 
of  transportation,  especially  in  land  transportation,  by 
the  universal  introduction  of  the  railroad.  The  economic 
development  of  both  these  periods  has  been  discussed  in 
the  preceding  chapters. 

We  come  now  to  the  third  period,  the  treatment  of 
which  forms  the  chief  interest  of  our  present  investigation. 
This  period  is  distinguished  by  the  rapid  development 
of  the  capitalistic  system  in  manufacturing  and  commerce 
and  the  decline  of  agriculture  in  relative  importance;  as 
the  Germans  express  it,  the  transition  from  an  Agrar-  to 
an  Industrie-Staat,  in  which  manufacturing  and  commerce 
come  to  have  a  predominating  place  in  the  economic  life 


PROGRESS    OF   GERMANY    SINCE    1871          29 

of  the  country.  Meanwhile  the  organization  and  concen- 
tration of  industry  has  gone  on  apace,  developing  into 
the  typical  form  of  Kartelle  and  syndicate. 

The  complete  unity  of  the  German  people  was  con- 
summated by  the  defeat  of  the  French  and  the  proclama- 
tion of  the  empire  at  Versailles,  January  18,  1871.  Two 
rich  provinces  and  five  milliard  francs  (approximately 
one  billion  dollars)  compensated  Germany  for  the  cost  of 
the  war,  and  gave  her  capital  to  develop  her  industries. 
The  annexation  of  Alsace  and  Lorraine  added  much  to 
the  industrial  power  of  the  empire,  not  only  by  increas- 
ing the  number  of  establishments,  but  in  forcing  a  higher 
standard  of  excellence  upon  the  German  manufacturers 
as  the  only  way  in  which  they  could  meet  the  new  internal 
competition.  But  by  far  the  greatest  gain  came  from  the 
uniform  policy  which  Bismarck  was  able  to  introduce,  the 
policy  of  making  the  empire  a  world  power  in  an  industrial 
as  well  as  in  a  military  sense. 

A  recent  German  writer  says:  — 

J' It  is  almost  superfluous  to  mention  the  tremendous  eco- 
nomic importance  which  attaches  to  the  founding  of  the  empire. 
The  empire  is  not  a  mere  extension  of  the  Zollvereine,  but  it 
has  become  the  source  of  uniform  legislation  for  every  phase 
of  our  economic  life,  and  the  support  of  the  economic  interests 
of  all  parts  of  the  land.  Now,  for  the  first  time,  is  possible  a 
uniform  industrial  policy  going  beyond  a  mere  tariff  and  com- 
mercial policy."  ^ 

Immediately  after  the  war,  there  followed  a  period  of 
tremendous  industrial  activity  and  speculation.  While  in 
the  whole  period  from  1851  to  1870,  295  stock  companies 
with  a  capital  of  nearly  $600,000,000  had  been  founded, 
in  the  four  years  from  1870  to  1874,  857  stock  companies 
with  a  capital  of  $800,000,000  were  established.  The 
crash  which  followed  was  proportionate  to  the  boom,  and 

*  Troltsche,  Die  Neuesten  Veraenderungen  im  DetUachen  Wirtschaft- 
leben.  Stuttgart:  1899,  p.  23. 


30       INDUSTRIAL   PROGRESS   OF   GERMANY 

the  effects  lasted  for  ten  or  fifteen  years.  The  recent  period 
of  expansion  did  not  begin,  therefore,  until,  at  the  latest, 
after  1890.  In  1900  a  crisis  appeared  and  affected  par- 
ticularly the  iron,  coal,  and  machine  industries,  but  the 
check  was  only  temporary,  and  the  country  is  again  enjoy- 
ing industrial  prosperity. 

The  period  between  1874  and  1890  may  be  regarded 
as  a  time  of  quiet  preparation  for  the  sudden  industrial 
expansion  which  we  are  now  studying.  Conditions  were 
forming  which  needed  but  the  appearance  of  a  new  spirit 
of  enterprise  to  bring  about  a  splendid  blooming-time  for 
industry.  The  impulse  was  especially  given  by  the  elec- 
trical and  the  chemical  industries.  The  introduction  of 
electricity  in  lighting  and  traction  and  as  motive  power 
in  factories  created  a  demand  for  machinery,  and  indi- 
rectly for  other  products,  which  quickened  all  industry. 

In  the  short  period  between  the  industrial  census  of 
1882  and  the  last  one  in  1895,  the  relative  decline  of  agri- 
culture as  compared  to  other  industrial  occupations  was, 
according  to  the  percentage  of  the  industrially  active 
population  engaged  in  them,  as  follows:  ^  — 

1882  1895 

Percentage  engaged  in  agriculture  42.5%  35.7% 

Percentage  engaged  in  manufacturing  and  building    35.5  39.12 

Percentage  engaged  in  trade  and  commerce  10.0  11.52 

In  Great  Britain  the  distribution  is  as  follows :  ^  — 

1841  1895 

Engaged  in  agriculture  37.8%  15.1% 

Engaged  in  manufacturing  and  building       34.8  53.7 
Engaged  in  trade  and  commerce                      7.6  9.9 

Since  1895  the  shifting  of  the  population  from  agri- 
culture to  manufacturing  and  commerce  has  to  all  appear- 
ances gone  on  more  rapidly  than  before  in  Germany.    At 

'  Von  Halle,  Volks-  und  See-Wirtschajt,  p.  26. 
^  Mulhall,  Dictionary  of  Statistics. 


PROGRESS   OF   GERMANY    SINCE    1871         31 

the  beginning  of  the  century  at  least  three  fourths  of 
the  population  was  agricultural,  and  at  the  end  only  one 
third. 

The  population  of  the  area  now  included  in  the  Ger- 
man Empire  has  grown  during  the  nineteenth  century  as 

follows:  *  — 

1816  24,833,000 

1850  35,312,000 

1870  40,805,000 

1904  56,614,000 

The  movement  of  the  population  from  the  country  to 
the  towns  and  cities  is  one  of  the  signs  of  the  change  from 
an  agricultural  to  an  industrial  state.  The  proportion 
between  the  rural  and  urban  dwellers  has  altered  since 
1871  as  follows:  — 

1871  1900 

Urban  population  36%  54% 

Rural  population  64  46 

100  100 

In  England,  excluding  Ireland  and  Scotland,  the  percent- 
ages have  changed  thus :  — 

1891  1901 

Urban  population  75%  7r% 

Rural  population  25  23 

Development  of  the  Home  Market 

The  discussion  of  the  recent  expansion  of  German  trade 
and  industry  by  English  writers  has  been  so  involved 
with  warnings  to  English  industry  of  the  encroachments 
of  the  rival  in  the  field,  that  English-speaking  peoples 
have  been  impressed  with  the  idea  that  the  German  in- 
dustrial progress  of  the  past  decade  is  predominantly  a 
matter  of  increasing  foreign  trade.  It  comes  as  a  surprise, 
therefore,  when  we  hear  from  so  good  an  authority  as 
Professor  Sombart  that  "the  development  of  the  last 
decade  has  shown,  at  least  for  German  industry,  a  decrease 
of  the  share  of  foreign  trade  relatively  to  the  total  indus- 

^  Statistisches  Jahrbuch  fur  das  Devtsches  Reich,  1904,  p.  2. 


32       INDUSTRIAL   PROGRESS   OF   GERMANY 

trial  activity."  *    That  is  to  say,  the  domestic  market  has 
developed  at  a  more  rapid  rate  than  the  foreign  market. 

The  increase  of  production  from  1882  to  1895  has  been 
estimated  by  statisticians  working  on  the  basis  of  the 
industrial  censuses  of  those  years  at  from  40  to  50  per  cent. 
The  imports  and  exports  of  both  raw  materials  and  manu- 
factured goods  averaged  annually  during  that  period 
(1882-1895)  as  follows:  2  — 


IMPORTS   INTO   GERMANY 

(In  million  marks) 
1894-96 


Increase  over 
1881-83 

Raw  materials  3010.0  933.7 

Manufactured  goods  1111.8  70.6 

4121.8  1004.3 

EXPORTS   FROM   GERMANY 
(In  million  marJu) 

1894-96  1881-83 

Raw  materials  827.4  decrease  111.4 

Manufactured  goods  2439.8  increase  234.3 

3267.2  "        122.9 

From  these  statistics  it  may  be  seen  that  the  total  increase 
of  exports  from  1882  to  1895  amounted  to  but  4.4  per  cent, 
and  the  export  of  manufactured  goods  alone,  to  less  than 
10  per  cent. 

The  iron  and  steel  industries  are  not  only  the  ones  in 
which  the  recent  expansion  has  been  most  rapid,  but  they 
may  also  be  regarded  as  forming  the  substantial  basis 
for  the  growth  of  many  other  industries  which  use  iron 
and  steel  as  raw  material,  as  for  example,  of  the  electrical 
industry.  The  production  of  pig-iron  has  increased  from 
about  three  million  tons  in  1880  to  eight  and  a  half  in 
1900;  in  1880  the  excess  of  exports  over  imports  of  iron 
products  was  29,3  per  cent  of  the  whole  production;    in 

*  Die  Devische  Volkswirfschaft  im  XIX.  Jahrhundert,  p.  428. 
'  See  Von  Halle,  Interessen  dea  Devisches  Reiclis. 


PROGRESS   OF   GERMANY   SINCE    1871 


33 


1900  this  excess  was  only  7.3  per  cent.*  Therefore  we  are 
face  to  face  with  the  interesting  conclusion  that  practi- 
cally all  this  enormous  increase  of  production  of  five  and 
a  half  millions  of  tons  of  pig-iron  found  a  market  inside 
the  German  frontiers. 

The  chemical  industry  is  another  which  has  often  been 
referred  to  by  the  English  writers  in  proof  of  the  rapid  pro- 
gress of  the  German  in  the  world  market.  The  increase 
of  exports  in  this  industry  from  1882  to  1895  was  38.2  per 
cent  in  weight.  In  default  of  statistics  of  total  production 
in  this  branch,  we  can  nevertheless  roughly  indicate  the 
growth  of  the  industry  by  reference  to  the  increase  in  the 
number  of  employees.  It  may  fairly  be  assumed  that  in 
the  course  of  thirteen  years  of  improvement  and  invention 
the  amount  of  product  per  employee  had  increased,  and  the 
number  of  employees  having  increased  60.5  per  cent,  the 
total  amount  of  product  must  have  increased  at  least  that 
much.  Therefore  we  may  conclude  that  the  home  market 
for  chemicals  has  grown  faster  than  the  foreign. 

Woolen  and  cotton  goods  stand  at  the  head  of  the  list 
of  exports  according  to  value.  The  following  tables 
show  not  only  the  increase  of  production,  but  also  the  de- 
crease in  the  proportion  of  exports  to  the  total  quantity 
manufactured :  ^  — 


Years 
averaged 

Cotton  goods 
produced 

Export 

Percentage 
exported 

1836-40 

1851-55 

1856-61 

1880 

1897-99 

17,897  tons 
34,963 
49,987 
84,000 
189,450 

4,460  tons 

7,283 

9,157 
21,300 
35,300 

24.9% 

20.8 

18.3 

25.6 

18.6 

Woolen  yam 
consumed 

Export 

Percentage 
exported 

1840 
1860-61 
1880 
1900 

21,000  tons 
42,000 
66,000 
156,000 

3,250  tons 
12,500 
21,800 
29,300 

15.5% 
29.8 
33 
18.7 

lyuu  ioo,uuu  zy,ouu  lo./ 

^  Sombart,  Die  Deutsche  Volksvnrtschaft  im  XIX.  Jahrhundert,  p.  431. 
•  Ibid.  p.  432. 


34       INDUSTRIAL   PROGRESS   OF   GERMANY 

These  statistics,  taken  from  the  most  important  of  the 
export  industries,  are  sufficient  to  indicate  the  great  rela- 
tive importance  of  the  domestic  compared  with  the  foreign 
trade.  The  industrial  progress  of  Germany  has  meant 
the  economic  expansion  of  the  whole  country.  From 
whence  comes  this  great  demand  ?  The  fact  that  there 
were  almost  twenty  million  more  people  in  the  empire 
in  1904  than  in  1870  accounts  for  much  of  the  increase 
of  demand  directly.  More  of  the  new  demand,  however, 
comes  from  the  increased  consuming  power  of  the  people 
which  accompanies  industrial  development.  Technical 
progress  in  manufacturing  and  transportation  cheapened 
prices,  cheaper  prices  stimulated  demand,  which  in  turn 
led  to  production  on  a  large  scale,  lower  cost  of  produc- 
tion, and  eventually  still  lower  prices.  The  technical  pro- 
gress, which  was  the  primary  cause  of  this  series  of  causes 
and  effects,  was  at  first  almost  completely  borrowed  from 
England.  Spinning  and  weaving  machinery,  processes  in 
iron  and  steel  manufacture,  steam  engines  and  railways, 
were  merely  imitations  of  English  originals. 

Germany  secured  her  first  foothold  in  the  foreign  mar- 
kets because  she  could  make  imitations  of  high-grade 
English  wares,  and  could  offer  them  at  cheaper  prices  on 
account  of  their  poorer  quality.  In  his  report  Professor 
Reulleaux,  who  represented  Germany  at  the  Philadel- 
phia Centennial  in  1876,  said :  — 

"  In  the  industrial  field  we  have  met  a  defeat  equal  to  a  second 
Sedan.  A  united  and  regenerated  Germany  ought  to  occupy  the 
first  place  in  production  and  to  surpass  other  nations.  The 
contrary  has  happened ;  German  industry  produces  only  cheap 
and  nasty  articles.  She  has  made  no  progress  either  in  taste  or 
invention."  ^ 

It  is  this  cheapness,  even  at  the  expense  of  quality,  which 
developed  the  great  home  market,  for  Germany  was  a 

*  Blondel,  L'Essor  JndvMriel  et  Commercial  du  Peuple  AUemande, 
p.  152. 


PROGRESS    OF   GERMANY    SINCE    1871       35 

poor  country  thirty  years  ago,  and  even  to-day  the  German 
customer  is  a  much  more  economical  buyer  than  the  Eng- 
lishman or  the  American ;  economy  is  a  fixed  habit  with 
the  German. 

The  change  brought  by  industrialism  into  the  economic 
life  of  the  people  has  been  another  cause  of  the  exten- 
sion of  the  home  market.  Under  the  handicraft  system 
of  industry,  the  individual  was  much  less  dependent  on 
the  market  for  the  necessities  and  comforts  of  life.  The 
peasant  raised  on  his  land  his  food  and  the  raw  mate- 
rials out  of  which  his  family  made  clothing  and  other 
goods.  Whatever  outside  assistance  was  needed  was 
usually  paid  for  in  produce.  The  peasant  rarely  went  to 
market  either  as  buyer  or  as  seller.  Much  of  the  busi- 
ness of  the  handicraftsman  was  custom  work,  wherein  the 
customer  furnished  the  raw  material  and  paid  only  for 
the  labor,  and  for  that  sometimes  in  goods  rather  than 
in  money.  The  process  of  creating  the  home  market  for 
factory-made  goods  was  naturally  slow  among  a  con- 
servative population,  and  only  the  tremendous  cheapen- 
ing of  price  forced  the  people  into  dependence  on  the 
market. 

One  great  factor  in  lowering  the  prices  of  goods  was 
the  cheapening  of  transportation.  The  construction  of 
railways  was  prerequisite  to  the  development  of  the  home 
market,  except  for  the  very  small  portion  of  the  country 
which  could  be  served  by  rivers  and  canals.  The  back- 
wardness and  conservatism  of  the  German  of  the  middle 
of  the  century  is  nowhere  more  clearly  shown  than  in  the 
slowness  with  which  he  took  advantage  of  the  railroad  for 
his  industrial  development. 

The  comparative  growth  of  the  railway  mileage  of 
Great  Britain,  Germany,  and  the  United  States  is  shown 
by  the  following  table:  — 


36       INDUSTRIAL   PROGRESS    OF   GERMANY 

LENGTH    OF    RAILWAY    LINES 

(In  miles) 

1840      1850         1860         1870          1887  1903 

Great  Britain             838     6,620      10,430      15,540        19,810  22,152 

Germany                    341      3,640       6,980      11,730       24,270  32,477 

United  States          2,820      9,020      30,630     53,400      156,080  198,768 

The  difference  between  the  development  of  the  railways 
in  Great  Britain  and  in  Germany  is  accentuated  when  we 
recall  the  small  area  and  the  short  distances  in  the  former 
country,  together  with  the  coastwise  transportation  which 
had  already  an  established  trade,  and  against  which  the 
railroads  had  to  compete. 

Before  the  consolidation  of  the  German  States  into  an 
administrative  whole,  little  could  be  done  to  improve 
the  backward  and  unsatisfactory  conditions  prevailing 
in  the  transportation  systems,  both  land  and  water.  The 
assent  of  a  dozen  petty  governments  had  to  be  secured 
before  a  line  two  or  three  hundred  miles  long  could  be 
constructed. 

Transportation  facilities  are  the  very  foundation  of  the 
industrial  prosperity  of  any  country.  The  same  necessi- 
ties which  compelled  the  establishment  of  the  Zollvereine 
and  uniform  standards  of  weights,  coinage,  and  measures, 
demanded  also  a  uniform  system  of  transportation.  The 
rapid  extension  of  railway  mileage  between  1865  and  1880, 
when  in  fifteen  years  the  length  of  German  railways  in- 
creased from  8687  to  20,690  miles,  or  140  per  cent,  must  be 
attributed  largely  to  the  federation  of  the  states.  Since  the 
founding  of  the  empire,  the  government  has  been  keenly 
alive  to  the  advantage  of  a  complete  and  unified  system  of 
internal  transportation,  both  by  rail  and  water. 

Private  and  state  ownership  of  railroads  developed 
side  by  side  in  Germany.  The  lack  of  private  capital  and 
initiative  often  forced  the  governments  to  construct  lines 
when  the  need  became  great.  In  Bavaria,  in  1856,  the 
state  railways  were  turned  over  to  private  companies.    In 


PROGRESS   OF   GERMANY   SINCE    1871         37 

the  period  of  the  sixties,  the  laissez-faire  ideas  were  strong 
in  Germany,  and  most  people  were  in  favor  of  private 
ownership.  But  after  the  founding  of  the  empire,  a  gradual 
change  took  place  ;  the  Manchester  theories  had  never 
completely  driven  out  of  the  German  mind  the  belief  in 
state  control,  and  the  tendency  to  depend  upon  the  state. 

The  importance  of  railroads  from  a  military  point  of 
view,  which  had  been  demonstrated  in  the  last  war, 
together  with  the  fiscal  necessities  of  the  new  empire, 
induced  Bismarck  to  make  the  attempt  to  unify  all  the 
railroads  of  the  empire  under  the  control  of  the  imperial 
government.  The  refusal  of  the  larger  states  to  surrender 
the  administration  of  their  railways  shattered  this  plan, 
but  Prussia  proceeded  to  nationalize  her  lines,  and  her 
example  was  followed  by  all  the  other  states. 

The  purpose  of  Prussia  in  nationalizing  her  railways 
was  not  merely  military  and  fiscal.  She  proposed  a  definite 
policy  of  assistance  to  industry,  and  has  used  her  railroads 
to  attain  this  end.  First,  she  abolished  those  abuses  which 
inevitably  appear  when  railroad  management  is  in  the 
hands  of  private  companies,  and  even  sometimes  under 
state  control:  rebates  to  favored  shippers,  lack  of  facili- 
ties for  cheap  through  traffic,  expensive  service,  and  many 
other  points  where  the  interest  of  the  companies  diverges 
from  that  of  the  public. 

Prussia  has  not  hesitated  to  make  use  of  cheap  rates 
in  promoting  particular  interests  which  needed  assistance. 
For  instance,  when  there  was  a  movement  to  extend  Ger- 
man ship-building,  she  readily  granted  important  conces- 
sions in  freight  rates  on  raw  materials  for  ship  construc- 
tion. In  combination  with  the  steamship  companies  of 
Hamburg,  the  government  makes  a  very  low  combined 
rail  and  sea  freight  rate  from  inland  parts  of  the  empire 
to  ports  in  the  Levant  and  East  Africa,  which  induces  ship- 
ment by  German  steamship  lines  in  preference  to  others.* 
*  British  Consular  Reports,  1899. 


38       INDUSTRIAL   PROGRESS   OF   GERMANY 

At  the  present  time,  state  ownership  of  railroads  is 
almost  universal  in  the  German  Empire.  In  1904  only 
2807  miles  of  broad-gauge  private  lines  existed.  Out  of 
the  total  revenue  of  the  different  states,  which  amounts  to 
about  $1,155,000,000  annually,  the  profits  from  the  rail- 
roads contributed  $461,940,000,  or  about  40  per  cent. 
Unfortunately  for  the  development  of  the  railroads,  the 
governments  have  come  to  depend  on  this  source  of  revenue, 
and  expect  the  railroad  administration  to  provide  it  each 
year.  Thus  it  often  happens  that  needed  improvements 
or  extensions  are  sacrificed  to  the  fiscal  necessities  of  the 
states. 

The  larger  states,  Prussia,  Bavaria,  Wurtemberg, 
Baden,  for  example,  still  control  their  own  lines;  and 
while  as  a  rule  there  is  harmony  in  the  administration 
of  through  traffic,  yet  there  sometimes  develops  friction 
between  the  various  systems  just  as  between  large  com- 
panies. For  instance,  for  some  time  Prussia  discriminated 
against  the  Saxon  lines,  and  routed  freight  in  a  round- 
about way,  to  the  disadvantage  of  the  latter. 

The  passenger  rate  in  Prussia  is:  First  class,  8  pfennigs; 
second  class,  6  pfennigs;  third  class,  4  pfennigs;  fourth 
class,  2  pfennigs;  soldiers  and  workingmen  (the  latter 
under  certain  restrictions),  1  pfennig  per  kilometre.  Ex- 
pressed in  the  American  equivalent,  this  would  be,  first 
class,  3^  cents  per  mile;  second  class,  2h  cents;  third  class, 
1|  cents;  fourth  class,  1  cent;  soldiers  and  workmen,  ^  cent 
per  mile.  This  rate  is  for  passage  on  local  trains;  for  ex- 
press trains  a  slightly  higher  rate  prevails :  First  class,  3^ 
cents  per  mile;  second  class,  2^  cents;  third  class,  If  cents. 
Fourth  class  exists  only  in  Prussia,  and  there  are  fre- 
quent suggestions  for  its  abolition. 

The  recent  development  of  both  freight  and  passenger 
traffic  is  shown  by  the  following  tables :  ^  — 

*  Statistisches  Jahrbvch  fur  das  Deutsches  Reich,  1904,  p.  67. 


PROGRESS   OF   GERMANY   SINCE    1871         39 

PASSENGER   TRAFFIC 

Number  of  persons  carried  Passenger-kilometer 

1893  521,479,000  12,552,000,000 

1902  882,988,000  21,028,000,000 

FREIGHT  TRAFFIC 

Number  of  tons  moved  Ton-kilometers 

1893  244,179,000  24,661,000,000 

1902  364,629,000  36,670,000,000 

The  cheapening  of  freight  rates  since  1893  is  indicated 
by  the  following  table  showing  the  income  of  the  railroads 
per  ton  of  freight  hauled  one  kilometer  for  the  two  classes 
of  freight.  The  fast-freight  service  corresponds  to  our  sepa- 
rately administered  express  service.* 

EXPRESS   FREIGHT  ORDINARY   FREIGHT 

One  ton  per  kilometer  One  ton  per  kilometer 

1893  24.47  pf .    ($.095  per  mile)  3.79  pf.  ($.014  per  mile) 

1902  17.01  (  .067  "     "    )  3.52        (  .013  "      "    ) 

A  comparison  of  the  railroad  business  of  Great  Britain, 
Germany,  and  the  United  States  is  made  in  the  following 
table  (1901):  2  — 

MILEAGE 

Great  Britain  22,202  miles 

Germany  32,080     " 

United  States  198,346    " 

TRAFFIC   PER   KILOMETER 

Passengers  Freight  (tons) 

Germany  413,820  651,590 

United  States  89,721  760,414 

INCOME   OF   RAILROADS 

Passenger  traffic  Freight  traffic 

per  person  per  mile  per  ton  per  viile 

Germany                         $.0103  $.013    (incl.  express  fr.) 

United  States                     .0206  .0076 

*  Statistisches  Jahrbuch  fur  das  Detdsches  Reich,  1904,  p.  68. 
'  Ibid.  1904,  Anhang,  p.  23. 


40       INDUSTRIAL  PROGRESS   OF   GERMANY 

The  extension  of  railway  mileage  and  the  increase  of 
freight  transported  indicates  clearly  the  growth  of  the 
home  market.  The  enormous  cheapening  of  carriage 
charges  has  enabled  the  manufacturers  and  merchants 
to  introduce  their  factory-made  products  into  every  cor- 
ner of  the  empire  at  so  cheap  a  price  that  the  people  can 
no  longer  afford  to  make  their  own  goods.  All  classes 
have  become  more  and  more  dependent  on  the  market 
either  to  sell  their  products  or  labor,  or  to  buy  goods  for 
daily  consumption.  Therefore  the  demand  for  large  quan- 
tities of  cheap,  standardized  goods  has  risen,  and  the  con- 
ditions favoring  the  growth  of  industrialism  and  produc- 
tion on  a  large  scale  are  present. 

Development  of  the  Foreign  Market 

Germany  had  35,312,000  inhabitants  in  1850,  and 
59,495,000  in  1904;  an  increase,  therefore,  of  24,183,000 
in  fifty-four  years,  a  rate  of  increase  exceeded  only  by  the 
United  States  among  the  larger  nations. 

These  24,183,000  additional  inhabitants  increased  the 
density  of  population  of  the  country  from  165  persons 
per  square  mile  to  280  per  square  mile.  That  is  to  say, 
that  24,000,000  people  must  find  room  in  a  country  al- 
ready more  densely  populated  then  than  the  most  crowded 
part  of  the  United  States  is  to-day,  i.  e.  the  North  Atlantic 
States,  and  almost  as  densely  populated  as  France  is 
to-day  with  185.5  persons  per  square  mile. 

A  vast  industrial  change  has  of  necessity  accompanied 
this  almost  doubling  of  the  population.  In  1850  Ger- 
many exported  food-stuffs  and  raw  materials,  and  im- 
ported manufactured  goods;  now  her  principal  exports  are 
manufactured  goods,  and  her  imports  are  raw  materials 
and  food-stuffs.  In  this  period  she  has  changed  from  an 
agricultural  to  a  manufacturing  and  commercial  nation, 
a  change  which  England  made  years  earlier.  The  popu- 
lation of  the  country  has  long  since  grown  beyond  the 


PROGRESS    OF    GERMANY    SINCE    1871         41 

capacity  of  the  soil  to  furnish  a  sufficient  food  supply,  and 
the  deficiency  must  be  covered  by  imports  from  other 
countries.  Thus  Germany  was  forced  to  become  an  in- 
dustrial country  to  employ  her  surplus  labor,  and  indi- 
rectly to  get  a  living  for  her  people. 

The  following  statistics  show  the  nature  of  the  foreign 
trade  of  Germany  in  1903:  ^  — 


IMPORTS 

Value 

Percentage  of 
whole  import 

Raw  materials  for  industry 
Manufactures 
Food-stuffs 
Precious  metals 

$683,280,000 

290,373,000 

471,700,000 

76,550,000 

EXPORTS 

45.0% 
19.1 
30.9 
6.0 

Value 

Percentage  of 
whole  export 

Raw  materials  for  industry 
Manufactures 
Food-stuffs 
Precious  metals 

$294,100,000 

788,700,000 

122,610,000 

27,800,000 

23.8% 
64.0 

9.9 

2.3 

The  foreign  trade  of  Germany,  like  that  of  England,  is 
not  simply  a  matter  of  economic  advantage;  it  is  a  matter 
of  economic  life  and  death.  To  feed  her  people  she  must 
get  food  from  abroad;  to  get  her  food  from  abroad  she 
must  manufacture  and  sell  in  foreign  markets  goods  repre- 
senting in  their  value  a  large  proportion  of  labor  relative 
to  raw  material.  A  glance  at  the  following  lists  of  exports 
and  imports  will  show  how  far  this  principle  prevails. 
The  articles  are  arranged  according  to  their  importance 
in  1903,  the  percentages  showing  the  proportion  which 
each  bears  to  the  whole  value  of  the  exports  or  imports 
respectively:  ^  — 

*  StaiisHsches  Jahrbuch  fiir  das  Deutsches  Reich,  1904,  p.  98. 
'  Compiled  from  the  Statistisches  Jahrbuch  fur  das  Deutsches  Reich, 
1880,  1894,  and  1904. 


42       INDUSTRIAL   PROGRESS   OF   GERMANY 

EXPORTS   ARRANGED   ACCORDING   TO   IMPORTANCE 

1878  1893  1903 

Cotton  goods  3.2%  4.8%  5.9% 

Woolen  goods  4.5  5.7  4.8 

Machines  3.1  2.0  4.5 

Hard  coal  2.8  3.2  4.3 

Sugar  2.4  6.8  3.6 

Coarse  iron  ware  1.4  2.0  3.4 

Silk  goods  2.4  4.7  3.2 

Clothing  1.0  1.9  2.3 

Dyes  and  colors  1.7  1.6  1.7 

Fine  iron  ware  .3                   .8  1.7 

Books  and  pamphlets  1.6  1.6 

Lacquered  leather  goods  1.7  1.3  1.6 

Fine  leather  goods  1.6  1.2 

Pictures  and  engravings  1.3  1.3  1.2 

Grain  and  flour  12.9  1.2 

Wool  yarn  1.0  1.2  1.1 

Silver  and  gold  ware                                      .7  1.1 

Toys                                                                .9  1.0 

Coke  .25                .9  1.0 

Wheat  5.4  .05 

Rye  1.0  .04 

IMPORTS   ARRANGED   ACCORDING   TO   IMPORTANCE 

1878  1893  1903 

Raw  cotton  4.7%  5.1%  6.2% 

Wool  5.8  5.6  5.7 

Wheat  5.6  2.1  4.0 

Barley  1.9  2.3  2.6 

Gold  1.8  2.6 

Raw  silk  3.0  2.4  2.4 

Coffee  4.5  5.2  2.3 

Beef  hides  1.5  1.2  1.9 

Lumber  1.0  1.8 

Eggs  .7  1.4  1.7 

Raw  copper  .5                  .9  1.6 

Horses  1.4  1.2  1.5 

Timber  1.4  1.5 

Corn  1.7  1.4 

Woolen  yam  2.1  2.8  1.4 

Tobacco  leaves  2.5  1.8  1.4 

Lard  1.0  1.7  1.4 

Petroleum  1.9  1.1  1.3 

Chili  saltpetre  1.6  1.3 

Combed  wool                                                    .7  1.3 

Rubber  and  gutta-percha  .2                   .6  1.2 

Iron  ore                                                             .5  1.2 

Rye  3.8                  .6  1.3 

Grain  and  flour  16.0  10.0 

Machines  1.5                   .7  1.1 

Cotton  seed  1.1  1.0 


PROGRESS    OF    GERMANY    SINCE    1871         43 

The  most  important  items  of  foreign  trade  are  wool, 
cotton,  and  the  manufactures  thereof.  Since  Germany 
produces  no  cotton  at  all,  and  wool  only  as  a  by-product 
of  sheep-raising,  the  main  product  of  which  is  mutton, 
we  may  regard  the  exports  of  woolen  and  cotton  goods 
as  exports  of  the  products  of  German  labor,  and  scarcely 
at  all  as  the  exports  of  the  product  of  German  soil.  Three 
fourths  of  the  raw  cotton  imported  is  paid  for  by  the  cot- 
ton goods  exported. 

The  item  sugar  is  the  one  great  exception  in  all  the  list 
of  exports.  Sugar  is  a  food-stuff  and  practically  an  agri- 
cultural product,  since  the  manufacture  of  the  sugar 
from  the  beets  is  of  less  economic  importance  than  the 
culture  of  the  beets.  The  reasons  why  Germany  can  ex- 
port sugar  are:  first,  the  intensive  cultivation  which  the 
sugar-beet  requires,  thus  employing  a  large  amount  of 
labor  per  acre  of  ground;  and  second,  the  peculiar  adapta- 
bility of  much  of  the  German  soil  to  this  industry.  The 
policy  of  the  German  government  in  paying  a  bounty  on 
exports  of  sugar  has  artificially  encouraged  the  develop- 
ment of  the  industry.  Since  1893  the  bounty  having  been 
withdrawn,  and  the  price  having  been  raised  by  the  syn- 
dicate, the  importance  of  sugar  as  an  export  has  declined 
relatively  from  first  place  in  1893,  to  fifth  in  1903,  and 
absolutely  from  exports  to  the  value  of  209,200,000  marks 
in  1894  to  a  value  of  186,700,000  marks  in  1903. 

The  principal  raw  material  of  machinery  is  iron  and 
steel,  and  these  are  the  products  of  the  most  abundant 
raw  material  in  Germany,  most  of  the  value  of  which  is 
conferred  by  labor.  Moreover,  the  value  of  machinery 
itself  consists  largely  of  labor,  and  the  most  of  it  of  a  very 
highly  skilled  class.  Machinery,  therefore,  is  an  export 
which,  for  a  country  like  Germany,  is  the  most  profitable, 
requiring  for  its  production  much  labor,  of  which  the 
country  has  an  abundance,  and  little  natural  resources, 
which  the  country  must  carefully  husband. 


44       INDUSTRIAL   PROGRESS    OF   GERMANY 

The  export  of  hard  coal  is  ofTset  largely  by  a  heavy 
import,  so  that  the  net  export  (balance  over  import)  of 
hard  coal  amounts  to  about  2.5  per  cent  of  the  whole  ex- 
port instead  of  4.2  per  cent.  Moreover,  the  large  export 
in  the  years  from  1899  to  1903  was  due  to  an  over-pro- 
duction by  the  mines  during  a  period  of  business  depres- 
sion. Efforts  are  being  made  to  curtail  this  over-production 
by  a  combination  of  the  mine-owners,  which  in  the  future 
will  no  doubt  hinder  the  export  of  coal. 

As  an  item  of  foreign  trade,  grain  has  shown  the  great- 
est changes  since  1878.  In  that  year  grain  and  flour  made 
up  12.9  per  cent  of  the  exports  and  16  per  cent  of  the  im- 
ports; in  1903  they  had  declined  in  importance  to  1.2  per 
cent  of  the  exports  and  10  per  cent  of  the  imports.  That 
is  to  say,  that  whereas  in  1878  the  surplus  import  of  grain 
over  export  amounted  to  about  3  per  cent  of  the  whole 
imports,  in  1903  the  surplus  amounted  to  over  8.5  per  cent 
of  the  total  imports. 

It  is  very  puzzling  at  first  when  one  finds  that  the  im- 
ports of  grain  have  increased  so  little  in  twenty-five  years, 
while  all  the  time  Germany  is  becoming  more  and  more 
dependent  on  foreign  countries  for  her  bread-stuffs.  This 
surprisingly  small  increase  is  explained  when  the  great 
decline  in  the  export  of  grain  is  taken  into  consideration. 
In  1878  5.4  per  cent  of  the  exports  of  Germany  and  5.6 
per  cent  of  the  imports  consisted  of  wheat,  and  the  surplus 
import  of  wheat  amounted  to  less  than  $13,500,000;  in 
1903  the  surplus  import  amounted  to  $56,650,000.  The 
decline  in  the  relative  importance  of  the  foreign  trade 
in  food-stuffs  is  explained  by  the  tariff  laws  which  have 
been  enacted  to  relieve  the  severity  of  the  Agrarian  crisis. 
High  duties  have  been  laid  on  foreign  food-stuffs  to  pro- 
tect the  agriculturists  by  artificially  holding  up  the  price 
against  foreign  and  especially  American  competition. 

Com  (maize)  is  an  item  of  import  which  in  1878  was 
too  small  to  be  computed  separately.    In  1899  it  was  fifth 


PROGRESS   OF   GERMANY   SINCE    1871         45 

in  importance  among  the  imports,  85  per  cent  of  it  com- 
ing from  America.  In  the  last  four  years  the  heavy 
duty  imposed  has  caused  a  decHne  in  the  import  from 
$32,109,000  to  $23,074,000.  The  high  price  of  this  cereal 
in  the  American  market  during  the  last  few  years  no 
doubt  is  also  largely  responsible  for  the  falling  off  of  the 
import. 

The  increase  in  the  general  foreign  trade  of  Germany 
as  compared  with  that  of  Great  Britain,  France,  and  the 
United  States  is  shown  by  the  following  table :  ^  — 


FOREIGN   TRADE 

(In  millions  of  dollars) 

1884 

1894 

1902 

Grerman  Empire 

Import 

$828.8 

$1,010.8 

$1,422.8 

Export 

821.8 

783.6 

1,200.9 

Great  Britain 

Import 

1,915.4 

2,005.4 

2,591.1 

Export 

1,453.5 

1,344.5 

1,712.6 

France 

Import 

1,020.1 

933.6 

1,095.9 

Export 

821.3 

803.1 

1,076.3 

United  States 

Import 

674.1 

661.3 

912.0 

Export 

747.6 

900.7 

1,395.0 

The  statistics  of  Germany's  foreign  trade  are  not  strictly 
comparable  with  those  of  other  countries  before  1894,  nor 
are  the  later  figures  for  Germany  alone  with  the  earlier, 
since  the  customs  area  has  been  changed.  The  great  ports 
of  Bremen,  Hamburg,  and  Altoona  were  admitted  to  the 
Custom's  union  only  in  1888,  and  after  that  date  the  figures 
for  the  imports  have  increased  somewhat  simply  for  that 
reason,  while  the  figures  for  exports  were  very  slightly 
affected. 

The  most  important  countries  from  which  Germany 
imports  goods  and  the  share  of  each  in  the  import  trade 
for  1894  and  1903  are  given  herewith:  ^  — 

'  Staiisiisches  Jahrhuch  fur  das  Devischea  Reich,  1904,  Anhang,  p. 
28-31. 

'  Ibid.  1904,  p.  176. 


46       INDUSTRIAL   PROGRESS   OF   GERMANY 

1894  1903 

United  States                         12.4%  14.9% 

Russia                                      12.7  13.1 

Great  Britain                          14.2  13.2 

Austria-Hungary                    13.6  11.9 

France  (including  colonies)     5.0  5.5 

India                                         3.8  4.5 

Argentine                                 2.4  4.3 

The  most  important  countries  to  which  Germany  ex- 
ports goods  and  the  relative  share  of  each  for  1894  and 
1903  are  as  follows :  ^  — 

1894  1903 


Great  Britain 

20.8% 

19.3% 

Austria-Hungary 

13.2 

10.3 

United  States 

8.9 

9.1 

Netherlands 

8.0 

8.2 

Russia 

6.4 

8.1 

Switzerland 

6.2 

5.9 

France 

6.2 

5.3 

Belgimn 

4.9 

5.2 

The  United  States  is  first  in  importance  of  all  countries 
from  which  Germany  imports  goods,  having  since  1894 
usurped  the  place  occupied  by  Great  Britain.  Her  ex- 
ports to  Germany  have  increased  at  a  greater  rate  than 
those  of  any  other  country.  This  is  explained  by  the  fact 
that  the  bulk  of  these  exports  consist  of  raw  materials 
for  industry,  and  food-stuffs  for  which  Germany,  as  she 
develops  into  an  Industrie-Staat,  must  depend  more  and 
more  upon  foreign  countries. 

The  principal  articles  of  import  into  Germany  from  the 
United  States  were  in  1903:  ^  — 


Percentage  of  the 

Value 

total  import  from 
the  United  States 

Total  import  from  the  U.  S. 

$235,850,000 

100.0% 

Raw  cotton 

70,375,000 

33.0 

Crude  copper 

19,862,000 

8.4 

Wheat 

18,937,000 

8.0 

Petroleum 

17,599,000 

7.5 

Lard 

17,678,000 

7.5 

Corn  (maize) 

12,849,000 

5.3 

Statistisches  Jahrbuch  fur  das  Deutsches  Reich,  1904,  p.  179. 
Ibid.  1904,  chapter  vii. 


PROGRESS   OF   GERMANY   SINCE    1871         47 


Turpentine  and  products 

$6,855,000 

2.8% 

Oil  cake  and  oil  meal 

5,069,000 

2.1 

Preserved  and  dried  fruits 

4,451,000 

2.0 

Oleomargarine 

4,478,000 

2.0 

Cotton-seed  oil 

3,057.000 

1.3 

The  United  States  furnishes  about  70  per  cent  of  Ger- 
many's import  of  raw  cotton  and  about  83J  per  cent  of 
her  import  of  wheat.  Since  1900  the  import  of  corn  has 
decreased  from  $26,006,500  to  $12,849,250  —  over  50  per 
cent.  The  import  of  petroleum  from  the  United  States, 
which  amounts  to  80  per  cent  of  the  whole  consumption 
of  Germany,  is  entirely  in  the  hands  of  one  company, 
the  Deutsche-Amerikanische  Petroleum  Gesellschaft.  The 
size  of  the  dividends,  which  were  38  per  cent  in  1901, 
30  per  cent  in  1900,  45  per  cent  in  1899,^  indicates  that  the 
monopoly  of  this  commodity  is  nearly  as  profitable  as  in 
our  own  country.  Naturally,  the  German  company  works 
in  close  harmony  with  the  Standard  Oil  Company. 

The  United  States  is  not  so  good  a  market  for  German 
goods  as  either  Great  Britain  or  Austria-Hungary,  chiefly 
because  of  our  high  tariff  duties.  The  important  articles 
exported  from  Germany  to  the  United  States  in  1903  were :  ^ 

Percentage  of  the 
Value  total  export  to  the 

United  States 
Total  export  to  the  U.  S.  $117,300,000  100.0% 

Cotton  goods  (including  hosiery)        14,372,500  12.2 

Cotton  hosiery  6,595,000  5.6 

Silk  goods  9,881,500  8.4 

Porcelain  6,016,500  5.1 

Aniline  dyes  and  dye-stuffs  4,237,000  3.6 

Toys  4,172,750  3.5 

Gloves  2,819,250  2.4 

Shipping 

There  is  nothing  which  so  well  illustrates  the  recent 
industrial   progress  of   Germany  as  the  growth   of  her 

'  Handbufh  der  Wirtschaftskunde  Deutschlands,  vol.  iv,  p.  64. 
*  Statistiscfies  Jahrbuch  fiir  das  Deutsches  Reich,  1904.   Compiled  from 
chapter  vii. 


48       INDUSTRIAL   PROGRESS   OF   GERMANY 

shipping.  Since  1871  the  tonnage  of  German  steamships 
has  increased  1447  per  cent,  or  from  5  to  8  per  cent  of  the 
whole  steam  tonnage  of  the  world;  in  the  same  time  the 
tonnage  of  the  English  steamships  has  increased  566  per 
cent,  and  of  the  French,  347  per  cent.  Despite  the  rapid 
growth  in  tonnage  of  the  German  steam  shipping,  it  is 
still  only  one  seventh  as  large  as  the  English.  The  wonder 
of  it  is  that  the  Germans  have  been  able  to  make  the  pro- 
gress they  have  against  the  competition  of  England,  with 
all  her  advantages  of  harbors,  colonies,  and  prestige.  The 
infant  shipping  industry  could  not  be  sheltered  behind  a 
tariff  wall  against  strong  competition  like  the  iron  and 
steel  industries,  but  it  had  to  win  its  way  by  its  own  strength. 


GROWTH    OF   THE    GERMAN   SEA-SHIPPING  » 

BAILING   VESSELS  STEAM   VESSELS 


Number 

Net  tons 

Persons 

Number 

Net  tons 

Persona 

register 

engaged 

register 

engaged 

1871 

4372 

900,361 

34,739 

147 

81,994 

4,736 

1891 

2675 

693.415 

17,898 

896 

723,652 

22,317 

1900 

2288 

536,399 

13,268 

1293 

1,150,159 

31,027 

1903 

2232 

498,502 

12,516 

1545 

1,622,439 

42,984 

The  great  bulk  of  German  shipping  is  confined  to  two 
harbors,  Hamburg  and  Bremen,  both  on  the  North  Sea. 
In  1901  846  vessels  (both  sailing  and  steam)  of  1,601,994 
tons  belonged  to  Hamburg,  and  513  ships  of  875,598  tons 
to  Bremen.  Two  companies  own  most  of  the  larger  vessels 
of  these  ports,  —  the  Hamburg- American  in  Hamburg, 
and  the  North  German  Lloyd  in  Bremen.  They  are  by  far 
the  largest  steamship  companies  in  the  world.  The  Plam- 
burg-American  line  owns  125  vessels  of  619,916  tons,  and 
the  North  German  Lloyd  115  vessels  of  497,344  tons. 
These  lines  have  made  a  specialty  of  transatlantic  busi- 
ness, and  in  1904  they  carried  40  per  cent  of  the  passen- 
gers crossing  between  America  and  Europe. 

One  steamship  alone  of  the  North  German  Lloyd  line, 
*  Statistisches  Jahrbvch  far  das  Deutsches  Reich,  1904,  p.  81. 


PROGRESS   OF   GERMANY   SINCE    1871 


49 


the  Kaiser  Wilhelm  II  (tonnage  19,500),  has  a  greater 
tonnage  than  the  whole  Bremen  fleet  in  1825  (14,600 
tons)  and  about  half  of  the  Hamburger  tonnage  in  1840 
(39,670  tons),  the  fleet  consisting  of  211  ships. 

The  following  table  affords  a  comparative  view  of  the 
shipping,  both  sea  and  internal,  of  the  various  countries 
in  1901-03:  i  — 


STEAM   VESSELS 

TOTAL 

SHIPPING 

REMARKS 

Number 

Net  tons 
register 

Number 

Net  tons 
register 

Ox^er 

Germany 

1545 

1,622,439 

4,045 

2,203,804 

17.6  tons 

Russia 

810 

391,697 

3,188 

664,208 

20  t.  B. 

France 

1330 

548  921 

16,021 

1,217,614 

exc.  9  fishb. 

Great  Britain 

9770 

8,098,760 

20,043 

10,030,610 

15  t.  B. 

United  States 

8054 

3,418,088 
(gross  tons) 

24,425 

6,097,345 
(gross  tons) 

5t.  N. 

The  traffic  of  sea  ships  in  the  German  ports  compared 
with  that  of  other  countries  is  shown  by  the  following 
table.  The  figures  do  not  include  commerce  between 
ports  of  the  same  country ;  colonies  are  regarded  as  foreign 
countries  (1902). ^ 


Ports  of 


German  Empire 
Great  Britain 
France 
United  States 


ARRIVALS 

Belonging 

to  the 

country 


7,747,036 

32,302,436 

4,917.212 


Foreign 


DEPARTURES 

Belonging 
to  the  Foreign 

country 


(Registered  net  tons) 


7,749,690 
17,317,681 
14,123,296 


7,670,177 

32.600,471 

5,359,262 


7,715,628 
17,652,131 
14,244,245 


4,019,871   20,341,564    3,955,515   20,286,589 


From  this  table  it  may  be  seen  that  just  about  half  the 
German  shipping  is  carried  by  German  vessels,  while 
two  thirds  of  the  English  commerce  is  carried  by  English 
ships. 

*  Stalistisches  Jahrbuch  fur  das  Devisches  Reich,  1904,  Internationale 
Ubersichten,  p.  24. 
»  Ibid.  1904,  p.  25. 


50       INDUSTRIAL  PROGRESS   OF   GERMANY 

Postal  subsidies  are  granted  by  the  German  govern- 
ment to  two  companies,  —  the  North  German  Lloyd 
and  the  East  African  Steamship,  —  to  the  amount  of 
$17,027,500.  This  subsidy  is  paid  on  the  condition  that 
the  steamships  are  constructed  in  accordance  with  the 
Admiralty  requirements  so  as  to  be  adapted  for  use  in 
time  of  war  as  cruisers. 


CHAPTER   IV 

GROWTH    OF   THE   VARIOUS   INDUSTRIES 

As  in  the  case  of  Great  Britain,  the  industrial  strength 
of  modern  Germany  is  based  on  her  iron  and  steel  manu- 
factures. In  the  production  of  pig-iron,  Germany  has 
always  been  at  a  disadvantage  in  competing  with  Eng- 
land; her  ore  and  coal  are  not  so  easily  or  so  cheaply 
brought  together,  and  a  great  deal  of  her  ore  contains 
much  phosphorus,  which  lowered  its  quality  until  the  dis- 
covery of  the  Thomas-Gilchrist  process  in  1868. 

It  is  of  great  importance  that  the  ore  and  coal  deposits 
should  either  lie  in  close  proximity,  or  that  they  should 
be  situated  within  reach  of  cheap  transportation.  The 
ore  and  coal  of  England  are  most  favorably  situated, 
lying  close  together  near  the  coast.  The  importation  of 
either  of  these  raw  materials  is  thus  made  easy  in  case  of 
necessity ;  and  even  if  the  ore  or  coal  deposits  of  England 
should  run  short,  her  furnaces  could  still  exist  by  using 
foreign  ore  or  coal.  Dr.  Allendorf  ^  estimates  that  the 
item  of  transportation  forms  9  to  10  per  cent  of  the  cost 
of  production  of  English  pig-iron,  while  for  German  pig- 
iron  the  freight  charges  on  the  raw  material  amount  to 
from  28  to  30  per  cent.  The  relative  positions  of  the  iron- 
ore  and  coal  deposits  of  Germany  are  indicated  on  the 
map  accompanying  this  chapter. 

The  iron  industry  of  Germany  is  so  dependent  upon 
the  railroad  transportation  that  until  the  latter  had  reached 
a  high  stage  of  cheapness  and  effectiveness,  the  compe- 
tition of  the  English  iron  was  a  great  obstacle  in  the  way 
*  Handbuch  der  Wirtschajtskunde  Deutschlands,  vol.  iii,  p.  343. 


52       INDUSTRIAL  PROGRESS   OF   GERMANY 

of  the  development  of  the  industry  in  Germany.  Besides 
the  disadvantages  which  were  common  to  all  industry 
in  Germany  in  the  middle  of  the  century,  the  iron  indus- 
try since  1794  had  been  subject  to  the  Direktions  Princip, 
a  law  which  gave  to  the  governmental  officials  a  compre- 
hensive control  over  the  mines. 

The  Free-trade  era  from  1874  to  1879  postponed  still 
further  the  development  of  German  iron  production. 
The  following  figures  show  statistically  the  effect  of  that 
policy,  as  well  as  the  proportion  of  the  German  market 
which  was  supplied  by  foreign  and  especially  English 
producers :  ^  — 


Domestic 

Production 

Imports 

Rate  of  Tariff 

1872 

1,927,000  tons 

663,000  tons 

62i  cts.  per  ton 

1873 

2,174,000 

743,000 

From  Oct  1, 

1874 

1,856,000 

549,000 

free 

1878 

2,119,000 

485,000 

1879 

2,201,000 

388,000 

From  June  1, 

1885 

3,647,000 

223,000 

$2.60  per  ton 

1886 

3,499.000 

169,000 

1890 

4,626,000 

404,000 

1895 

5,433,000 

200,000 

1899 

8,095,000 

569,000 

1900 

8,469,000 

741,000 

One  of  the  most  important  factors  tending  to  pro- 
mote the  industry  from  the  beginning  of  the  seventies  on 
was  the  invention  of  the  Thomas-Gilchrist  process,  by 
which  the  phosphorus  contained  in  some  ores  could  be 
separated  from  the  iron,  and  thus  not  only  rid  them  of 
an  element  which  had  heretofore  destroyed  much  of  their 
value,  but  also  yield  as  by-product  a  valuable  commer- 
cial fertilizer.  It  was  the  German  ores,  especially  those  of 
the  Lorraine  district,  which  profited  most  from  this  process, 
and  a  grave  disadvantage  was  turned  into  a  positive  advan- 
tage, not  only  for  the  iron  industry  but  also  for  agriculture. 
Three  fourths  of  Germany's  need   for  phosphoric  acid, 

'  Handbtick  der  Wirtschaftshunde  DeutscMands,  vol.  iii,  p.  357. 


GROWTH   OF  THE  VARIOUS   INDUSTRIES    53 

used  especially  as  an  artificial  fertilizer,  is  covered  by 
this  by-product  of  the  iron  furnaces,  the  annual  yield  of 
which  is  450,000  tons. 

The  oldest  iron-ore  district  of  the  country  is  the  Sieger- 
land  district  near  the  Rhine  River,  In  earlier  times  the 
luxuriant  forests  near  the  mines  furnished  the  charcoal 
used  in  smelting,  so  that  neither  long  transportation  of  ore 
nor  fuel  was  necessary.  Now  the  ore  of  this  locality  is 
shipped  to  districts  having  hard-coal  mines,  especially  to 
the  Westphalian. 

The  Lorraine  ore  has  a  smaller  percentage  of  iron  than 
that  produced  by  the  Siegerland  mines,  and  contains  a 
high  percentage  of  phosphorus.  This  district  now  fur- 
nishes 58  per  cent  of  the  German  supply.  It  is  esti- 
mated that  the  deposits  here  amount  to  three  thousand 
million  tons,  which  at  the  present  rate  of  extraction  will 
last  for  700  years.  The  ore  of  this  district  is  as  a  rule 
smelted  with  coal  brought  from  the  Saar.  The  close 
proximity  of  the  coal  and  ore  of  Lorraine  will,  according 
to  Dr.  Paxmann,  cause  the  transfer  of  the  centre  of  the 
iron  industry  in  the  future  from  the  Rhine-Westphalia 
district  hither. 

The  iron  industry  of  the  Rhine-Westphalia  district 
centres  around  Dortmund,  and  about  40  per  cent  of  all  the 
pig-iron  produced  in  Germany  is  smelted  there.  Besides 
the  ore  from  Siegerland  and  Nassau,  large  quantities 
are  imported  from  Sweden,  Belgium,  Holland,  and  Spain. 
The  excellent  coking-coal  of  this  district  was  the  original 
cause  of  the  founding  of  the  iron  industry  in  this  place. 

The  Silesian  district  lies  on  the  eastern  frontier,  and 
its  situation  with  regard  to  transportation  and  markets 
is  far  inferior  to  that  of  Westphalia;  but  on  the  other 
hand,  it  possesses  the  advantage  of  having  its  coal  and 
ore  lying  close  together;  the  coal,  however,  on  account 
of  its  impurities,  is  of  less  value  for  coking.  The  ore  is 
very  rich  in  iron,  and  the  deposits  lie  close  to  the  surface 


54       INDUSTRIAL  PROGRESS    OF   GERMANY 

and  directly  over  the  coal  mines.     Ten  per  cent  of  the 
total  pig-iron  production  comes  from  this  district. 

In  the  production  of  pig-iron  and  steel,  Germany  has 
overtaken  Great  Britain  within  the  last  few  years,  and 
stands  second  only  to  the  United  States.  The  following 
table  shows  the  development  of  the  industry  in  Germany, 
Great  Britain,  and  the  United  States :  — 

PRODUCTION   OF   PIG-IRON  * 


{In  thousand  tons) 

1865            1880 

1890 

1900 

1903 

World  production 
United  States 
Great  Britain 
Germany 
France 

9,481          18,331 
845           3,896 

4,896           7,802 
975           2,728 

1,290           1,733 

PRODUCTION   OF 

(In  tons) » 

27,627 
9,353 
8,033 
4,658 
1,962 

STEEL 

40,837 

14,009 

8,909 

8,520 

2,699 

18,298 
8.952 

10,018 
2,828 

1880 

1895 

1900 

World  production 
United  States 
Germany 
Great  Britain 
France 

4,233,420 
1,287,983 

624,418 
1,341,690 

388,844 

14,898,082 
6,312,074 

2,  830,468 

3,365,523 

714,523 

27,859,882 

10,689,640 

6,646,869 

4,904,238 

1,660,118 

Since  1888  the  consumption  of  iron  per  capita  in  the 
German  Empire  has  doubled,  and  since  1861  has  increased 
fivefold.  The  rapid  increase  since  1888  has  been  due  in 
large  part  to  the  development  of  the  electrical  industry. 
Not  only  has  a  demand  for  iron  in  the  manufacture  of 
electrical  machinery  arisen,  but  the  employment  of  elec- 
trical power  has  brought  about  an  extensive  building  of 
street  railways,  creating  a  demand  for  steel  rails. 

CONSUMPTION   OF    PIG-IRON   PER    CAPITA    IN    GERMANY 

1861-1864  50.4  pounds  1891  139.0  pounds 

1873  144.6  1900  262.9 

1882  103.0 

*  Handbuch  der  Wirtschafi^kunde  DeutscMands,  vol.  iii,  p.  119.  The 
figures  for  1903  are  taken  from  the  Statvdisches  Jahrbuch  fur  das  Deidschea 
Reich,  1904,  International  Ubersicht,  p.  15. 

'  Sombart,  Die  Deutsche  Volkswirtschaft  im  XIX.  Jahrhundert, 
Anhang,  p.  31. 


GROWTH   OF  THE  VARIOUS   INDUSTRIES      65 

The  year  1901  brought  a  severe  crisis  to  the  indus- 
try, made  more  perceptible  on  account  of  the  heavy  over- 
production of  the  preceding  years.  The  consumption  sank 
from  262.9  pounds  per  capita  in  1900  to  178.4  pounds 
in  1901,  which  was  below  the  average  for  the  decade  1891- 
1900.  The  producers  were  forced  to  take  combined  action 
to  prevent  over-production,  and  the  result  was  the  estab- 
lishment of  strong  syndicates,  which  to-day  completely 
control  the  market.  The  fact  that  these  syndicates  grew 
out  of  an  urgent  necessity,  unlike  our  United  States  Steel 
Corporation,  which  was  founded  in  a  time  of  prosperity, 
has  caused  them  to  be  regarded  with  less  disfavor  by 
public  opinion,  and  no  hostile  legislation  has  yet  been 
attempted  against  them. 

Alining 

One  fifth  of  the  industrially  active  population  of  Ger- 
many are  engaged  in  the  mining  and  smelting  industries. 
They  are  almost  entirely  in  the  hands  of  large  concerns. 
Four  fifths  of  all  the  persons  engaged  in  them  are  employed 
by  firms  having  more  than  200  workmen.  The  quantity 
and  value  of  the  mine  products  of  the  country  may  be  seen 
from  the  following  table:  ^  — 

Average  for  the  Years    Million  Tons     Value  in  Million  Marks 

1861-65  26  151 

1871-75  51  337 

1876-80  60  346 

1890  104  725 

1898  148  937 

1902  174  1235 

The  total  amount  for  1902  was  distributed  among  the 

various  mine  products  as  follows :  ^  — 

Tons  Value 

Hard  coal                       107,473,900  950,517,000  marks 

Soft  coal                            43,126,300  102,571,000 

Rock  salt                             1,010,400  4,699,000 

*  Huber,  Deuischland  als  Industriesiaat,  p.  279.  Figures  for  1902  from 
Statistisches  Jahrbuch  fur  das  Deutsches  Reich,  1904,  p.  47. 

*  Statistisches  Jahrbuch  fiir  das  Deuisches  Reich,  1904,  p.  47. 


56       INDUSTRIAL  PROGRESS   OF   GERMANY 


Tons 

Valve 

Potassium  salts 

3,285,000 

40,006,000  marks 

Iron  ore 

17,963,600 

65,731,000 

Lead 

167,900 

13,436,000 

Zinc  ore 

702,500 

29,911,000 

Copper  ore 

761,900 

20,431,000 

Silver  and  gold  ore 

11,700 

1,389,000 

Coal  is  by  far  the  most  important  of  the  mine  products. 
The  production  of  coal  in  Germany  as  compared  with 
that  of  other  countries  is  as  follows :  ^  — 

Germany  Great  Britain  United  States 

1891  94,253,000  tons      188,456,000  tons     152,921,000  tons 

1902  150,500,000  230,739,000  273,515,000 

The  oldest  hard-coal  producing  district  of  Germany  is 
that  of  the  Rhine- Westphalia.  The  supply  there  is  esti- 
mated to  be  129,300,000,000  tons,  which,  with  an  annual 
production  of  100,000,000  tons,  will  last  for  1293  years. 

Second  in  importance  but  first  in  the  amount  of  hard 
coal  present  is  the  district  of  Upper  Silesia.  It  is  esti- 
mated that  there  is  more  coal  there  than  in  the  whole  of 
the  United  Kingdom.  A  German  authority  calculates  that 
there  are  62,800,000,000  tons  of  hard  coal  lying  within 
1000  meters  of  the  surface  in  this  district,  101,550,000,000 
tons  within  1500  meters  of  the  surface,  and  140,800,000,000 
tons  within  2000  meters  of  the  surface. 

Smaller  hard-coal  districts  are  those  of  Lower  Silesia 
and  Saarbriicken,  the  deposits  in  the  latter  amounting 
approximately  to  14,000,000,000  tons.^ 

From  these  estimates  of  the  size  of  the  eoal  deposits 
it  will  appear  that  Germany  is  assured  for  a  long  time  to 
come  of  the  endurance  of  the  basis  of  her  industrial  life. 

The  Manufacture  of  Machinery 

The  great  increase  in  the  consumption  of  iron  and 
steel  in  Germany  since  1890  indicates  a  large  expansion 

*  Sfafisiisches  Jahrhuch  fur  das  Deutsches  Reich,  1904,  p.  15,  Anlage. 
'  These  figures  are  collected  in  the  Handbuch  der  Wirtschaftshmde 
DetUscfdands,  vol.  iii,  pp.  6-9. 


GROWTH   OF  THE   VARIOUS   INDUSTRIES     57 

of  the  machine  industry,  for  not  only  has  the  production 
of  such  a  vast  quantity  of  iron  and  steel  required  the  em- 
ployment of  much  machinery  in  mining  and  smelting, 
but  a  great  part  of  the  iron  and  steel  consumed  has  gone 
into  the  manufacture  of  machinery,  or  into  the  construc- 
tion of  railroads,  bridges,  and  buildings  in  which  ma- 
chinery is  liberally  used. 

The  Germans  have  not  had  the  reputation  of  being 
great  mechanical  inventors,  and  they  are  certainly  inferior 
to  the  Americans  in  this  respect,  yet  nevertheless  they  are 
in  the  front  rank  as  a  machinery-manufacturing  nation. 
They  have  shown  themselves  exceedingly  quick  in  adopt- 
ing the  improvements  of  others.  Germany  is  a  splendid 
market  for  American  machinery  of  the  newest  types,  but 
American  manufacturers  have  learned  that  it  is  only  a 
short  while  until  the  Germans  themselves  are  making  the 
same  machinery,  usually  at  a  cheaper  price.  In  this 
matter  they  show  themselves  more  enterprising  than  the 
English. 

The  well-informed  author  of  the  articles  in  the  London 
Times  (autumn,  1903)  on  "German  Industry,"  says:  — 

"  The  verdict  of  a  highly  competent  authority  who  has  visited 
every  industrial  exhibition  for  the  last  fifteen  years,  and  who 
knows  the  United  States  as  well  as  England  and  other  parts 
of  Europe,  will  suffice.  'It  was,'  he  said,  'the  finest  exhibition 
of  tools  and  machinery  I  ever  saw  '  "  (referring  to  the  exhibi- 
tion of  German  products  at  DUsseldorf  in  1902). 

England,  however,  is  still  able  to  maintain  her  suprem- 
acy in  the  manufacture  of  textile  machinery,  and  the  United 
States  in  the  manufacture  of  most  kinds  of  agricultural 
machinery. 

The  greatest  growth  of  the  machine  industry  has  taken 
place  since  1895,  but  the  latest  statistics  available  show- 
ing the  number  of  employees  are  those  of  the  last  indus- 
trial census  taken  in  that  year.  Between  the  two  censuses 
of  1882  and  1895,  the  growth  has  been:  — 


£8       INDUSTRIAL   PROGRESS   OF   GERMANY 


1882 

1895 

Increase 

Concerns  manufacturing  machinery 
Employees 

82,874 
356,089 

87,879 
582,676 

6% 
63.7 

The  small  increase  in  the  number  of  firms  relative  to 
the  large  increase  in  the  number  of  employees  indicates  the 
great  concentration  which  has  taken  place  in  this  indus- 
try. There  has  been  practically  no  increase  in  the  number 
of  firms  employing  less  than  ten  people,  but  those  employ- 
ing more  than  fifty  have  almost  doubled  in  number. 

Since  1879  the  amount  of  steam  power  employed  in 
Prussia  has  increased  as  follows :  — 

1879  1901 

Number  of  steam  engines  29,895  75.958 

Capacity  in  horse  power  887,784  3,709,662 

To-day  there  are  in  the  German  Empire  18  locomotive 
factories  with  an  annual  capacity  of  1400  locomotives, 
and  employing  about  20,000  men.  In  1903  the  export  of 
locomotives  and  traction  engines  amounted  to  $7,603,000, 
over  25  per  cent  going  to  Russia  and  Spain;  each  of  these 
countries  took  about  one  million  dollars'  worth.  The 
market  for  German  locomotives  in  Russia  has  declined 
since  1896,  when  the  exports  amounted  to  over  two  mil- 
lion dollars.  The  competition  of  the  United  States  was 
responsible  for  this,  especially  because  the  American 
firms  could  offer  much  quicker  delivery  than  either  the 
Germans  or  the  English. 

It  is  in  the  electrical  industry  that  Germany  has  made 
her  greatest  progress,  one  of  the  direct  results,  no  doubt, 
of  her  excellent  technical  schools.  In  1880  electricity 
was  commercially  employed  only  in  telegraphy,  and  in  1882 
the  whole  number  of  persons  employed  in  the  industry 
was  too  small  to  be  separately  enumerated.  In  1895  there 
were  15,000  people  engaged  in  the  industry,  and  the 
number  at  the  present  time  is  estimated  at  50,000.  The 
capital  invested  is  estimated  at  two  billion  dollars  (Iluber). 
This  tremendous  and  rapid  growth,  which  has  placed 


GROWTH   OF  THE  VARIOUS   INDUSTRIES     69 

Germany  second  only  to  the  United  States  in  the  indus- 
try, was  extraordinarily  stimulating  to  other  branches, 
and  accounts  for  not  a  little  of  the  boom  from  1896  to 
1900.1 

One  of  the  principal  uses  of  electricity  is  in  street  rail- 
ways. In  1902  over  100  German  cities  had  electric  street 
railways,  with  a  length  of  2200  miles,  and  representing 
an  investment  of  a  billion  dollars.  Germany  has  over 
one  third  of  all  the  electric  street  railways  in  Europe 
and  over  half  of  the  total  mileage.  Ninety-one  per  cent  of 
all  the  electric  roads  of  Europe  (excluding  Great  Britain) 
were  built  by  German  firms.  The  electric  roads  have  not 
yet  begun  to  compete  with  the  steam  roads  for  long-dis- 
tance traffic,  as  in  the  United  States. 

The  six  largest  electrical  companies  have  an  invested 
capital  in  stocks  and  bonds  of  over  $80,000,000,  which 
has  increased  since  1894  from  $16,000,000. 

The  Allgemeine  Elektrizitatsgesellschaft  has  three 
large  factories  employing  17,000  men.  Their  sales  for  the 
year  1899-1900  included  16,000  dynamos  of  208,000  H.  P. 
Up  to  that  year,  the  company  had  built  250  electrical 
plants.  Their  field  includes  all  Europe,  and  extends  to 
countries  beyond  the  seas.  They  have  established  a  branch 
company,  with  $2,500,000  capital,  to  handle  their  business 
in  Argentine  and  Chili. 

The  export  of  electrical  machinery  in  1903  was  $5,000,000. 
Great  Britain  is  by  far  the  best  customer,  taking  in  that 
year  over  twenty-five  per  cent  of  the  whole  export. 

Germany  still  imports  more  agricultural  machinery 
than  she  exports,  although  in  the  last  four  years  the  im- 

*   MANTJFACTURE  OF   ELECTRICAX.  MACHINERY  IN  THE   UNITED  STATES 

1880  1890  1900 

Number  of  concerns                                     76  189  680 

Capital  invested  (in  million  dollars)               1.5  19.8  86 

Number  of  employees                                 1271  8802  40,890 

Value  of  product  "(in  million  dollars)             2.7  19.2  92 

Wages  and  salaries  (in  million  dollars)           .7  6.4  24.9 


60       INDUSTRIAL  PROGRESS   OF   GERMANY 

ports  have  decreased  more  than  half  (from  $6,929,000 
in  1900  to  $3,100,000  in  1903).  Almost  two  thirds  of  her 
import  comes  from  the  United  States,  and  over  half  her 
export  goes  to  Russia. 

The  Chemical  Industry 

In  the  chemical  industry  Germany  is  easily  the  first 
nation  of  the  world.  This  industry  affords  the  best  illus- 
tration of  the  recent  progress,  and  reveals  more  clearly 
than  any  others  the  causes  which  have  made  that  country 
industrially  great.  The  importance  of  the  manufacture 
of  chemicals  can  be  appreciated  when  we  learn  that  the 
total  value  of  the  annual  product  is  over  $300,000,000, 
which  is  more  than  the  value  of  all  the  machinery  manu- 
factured. 

This  splendid  industry  is  the  direct  product  of  German 
technical  education.  The  beginning  was  made  when  Pro- 
fessor Justus  V.  Liebig  founded  the  first  chemical  labo- 
ratory in  1827,  at  the  University  of  Giessen.  The  con- 
vincing success  of  this  experiment  led  the  several  state 
governments  to  found  and  maintain  advanced  schools  for 
scientific  study.  These  technical  schools  and  university 
laboratories  may  be  regarded  as  the  corner-stone  of  the 
nation's  industrial  greatness,  and  the  whole  foundation 
of  its  supremacy  in  the  chemical  industry. 

For  the  manufacture  of  crude  chemicals,  Germany 
possesses  an  abundant  supply  of  raw  materials,  salt, 
sulphur,  and  limestone,  together  with  the  coal  necessary 
for  heat  and  power. 

The  capital  invested  in  this  industry  in  104  of  the  largest 
stock  companies  amounted  in  1898  to  295,373,100  marks 
($71,003,000),  on  which  a  dividend  of  39,921,970  marks 
($9,115,800)  was  paid,  an  average  of  13.52  per  cent, 
which  was  slightly  higher  than  the  average  for  the  previous 
ten  years. 

The  most  interesting  branch  of  the  chemical  industry 


GROWTH    OF  THE   VARIOUS  INDUSTRIES     61 

IS  the  manufacture  of  dye-stuffs  from  coal-tar.  It  is  in  this 
field  that  the  most  recent  and  brilliant  achievements  of 
the  German  chemists  have  been  won.  In  1860  all  the  dyes 
used  were  organic,  and  Germany  was  almost  entirely  de- 
pendent on  foreign  countries  for  her  supply.  The  annual 
import  of  dyes  at  that  time  cost  the  country  50,000,000 
marks  ($12,150,000).  By  1900  the  conditions  had  so 
changed  that  the  import  had  sunk  to  almost  nothing, 
and  the  export,  on  the  other  hand,  had  risen  to  100,000,000 
marks  ($24,300,000).  Almost  without  exception,  the  dis- 
covery and  production  of  coal-tar  dyes  has  remained  in 
the  hands  of  the  Germans. 

The  raw  material  used  is  the  bi-product  of  gas  and 
coke  manufacture,  which  was  formerly  a  worse  than  use- 
less waste.  Now  Germany  not  only  utilizes  all  the  coal- 
tar  produced  in  that  country,  but  imports  large  quantities 
in  the  form  of  benzole  from  Great  Britain,  Belgium,  and 
Austria-Hungary.  All  this  import  and  more  is  sold  back 
to  these  countries  again,  multiplied  many  times  in  value, 
in  the  shape  of  dyes. 

Four  fifths  of  all  the  world's  products  of  dye-stuffs,  as 
well  as  a  large  proportion  of  the  medical  preparations 
derived  from  coal-tar,  are  made  in  Germany.  The  annual 
production  of  these  dyes  amounted,  according  to  the 
statement  of  the  Reichsamt  des  Innern  in  Germany  in 
the  year  1897,  to  the  value  of  120,000,000  marks. 

For  centuries  indigo  had  been  one  of  the  great  items 
of  import  to  the  textile-producing  countries.  In  1892 
the  German  Empire  imported  3,556,740  pounds  of  nat- 
ural or  vegetable  indigo,  valued  at  $4,450,.000.  The  dis- 
covery of  a  process  for  making  artificial  indigo,  made 
by  a  MUnchner  chemist.  Dr.  Bayer,  in  1897,  has  com- 
pletely revolutionized  this  trade,  for  in  1902  the  import 
of  vegetable  indigo  had  decreased  to  833,000  pounds, 
while  the  export  of  artificial  indigo  amounted  to  18,308,000 
pounds  in  1903. 


62       INDUSTRIAL  PROGRESS   OF   GERMANY 

Dr.  Bayer's  discovery,  which  had  such  an  important 
eflFect  on  a  great  industry,  consisted  of  a  process  for  the 
making  of  artificial  indigo,  called  alizarene,  from  a  coal- 
tar  product,  anthracene.  As  the  result  of  this  one  discov- 
ery, Germany  is  not  only  relieved  from  the  necessity  of 
importing  this  dye-stuff  at  a  great  expense,  but  she  is 
also  able  to  realize  from  its  export  a  very  considerable 
national  profit. 

This  is  but  one  instance  of  the  advantage  Germany 
has  derived  from  the  labors  of  her  army  of  scientifically 
trained  chemists.  While  it  may  be  the  most  spectacular, 
it  is  by  no  means  the  most  important.  The  sugar-beet 
industry  owes  a  large  debt  to  the  agricultural  chemists, 
who  have  been  able  to  raise  the  percentage  of  saccharine 
content  of  sugar-beets  from  5.7  per  cent  in  1840  to  13  per 
cent  at  the  present  time. 

The  importance  of  the  manufacture  of  dyes  and  the 
number  of  chemists  employed  are  indicated  by  the  follow- 
ing list  of  the  largest  companies  engaged  in  the  industry, 
their  foreign  branches,  workmen  employed,  and  the  capital 
invested :  *  — 

Name  of  Company  and  Number  of        Work-      Capital 

BrancJies  Chemists,  etc.        men 
Aktiengesellschaft  fiir  Anilin-fabri-      55  chemists        1550    $2,000,000 
cation  in  Berlin.  10  engineers 

Branches:  St.  Pons,  Fr.;  Mos-       21  experts 

cow  and  Libau,  Russia.  150  officials 

Badische  Anilin-  u.  Soda-fabrik  in  148  chemists  6300    6,000,000 

Ludwigshafen.  75  experts 

Branches:  Neuville,  Fr.;  Butirki,  305  officers,  etc. 
Russia. 
Leopold  Cassella  &  Cie,   Frank-      80  chemists        1800 
furt  a.  M.  and  experts 

Branches:    Lyons,   Fr.;    Riga,  170  officers 
Russia. 

Farbenfabriken,     vorm.     Friedr.  145  chemists        4200      4,750,000 

Bayer  &  Cie.  27  engineers 

Elberfeid.    Branch:   St.  Flers,  Fr.  148  experts 

Farbwerk  Miihlheim.    Miihlheim.  450  500,000 

Brnnch:   Lyons,  France. 

*  Katalog  der  Sammelaustellung  der  deutscken  chemischen  Industrie 
auf  der  Weltaustellung  zu  Paris,  1900. 


GROWTH   OF   THE   VARIOUS   INDUSTRIES    63 

$4,000,000 


Farbwerke  vorm.  Meister,  Lucius 

129  chemists 

3500 

&  Brunig.    llochst  a.  M. 

36  engineers 

Branches:  Creil,  France;   Mos- 

211 officers 

cow,  Russia. 

Kalle  &    Cie.    Bieberich   a.    Rh. 

128  chemists. 

500 

Br.:  Warsaw  and  New  York. 

etc. 

K.  Oehler.    Offenbach  a.  M. 

80  chemists 

450 

G.  Siegle  &  Cie.    Stuttgart. 

44  chemists 

106 

Textiles 

Before  the  Thirty  Years'  War,  when  Germany  was  en- 
joying industrial  and  commercial  prosperity,  the  chief 
articles  of  exj)ort  were  linen  and  woolen  goods.  The 
occupations  of  spinning  and  weaving  were  carried  on 
alongside  of  the  raising  of  flax  and  the  herding  of  sheep, 
and  were  widely  extended  among  the  people.  For  a  long 
time  Germany  ruled  the  world  market  for  cloths,  and  had 
a  relatively  large  trade  therefor  with  England,  Russia, 
Spain,  and  Italy.  It  was  only  in  the  seventeenth  century 
that  England  began  to  be  a  competitor.  The  invention  of 
the  spinning  machine,  the  power  loom,  and  the  steam 
engine  in  the  next  century  enabled  England  to  produce  tex- 
tiles on  a  capitalistic  basis  so  cheaply  that  no  other  coun- 
try could  successfully  compete  with  her,  even  in  its  own 
home  markets. 

By  carefully  guarding  the  secret  of  her  inventions,  and 
by  forbidding  the  export  of  machines,  models,  or  plans, 
England  was  able  to  reserve  a  great  part  of  their  advan- 
tage to  herself.  It  was  only  in  1798  that  the  first  mechani- 
cal cotton  spinning  machines  driven  by  water  power  were 
erected  in  Saxony.  During  the  continental  blockade  of 
Napoleon,  when  the  English  supply  of  cloths  was  with- 
held from  the  continental  markets,  the  industry  experi- 
enced a  temporary  boom,  but  fell  into  desuetude  again 
when  a  barrier  against  imports  was  raised. 

The  Zollvereine  gave  to  the  industry  a  wider  home 
market,  permitting  the  investment  of  more  capital  and 
the  introduction  of  new  machinery.    The  crisis  of  1836 


64       INDUSTRIAL   PROGRESS   OF   GERMANY 

and  1839  weeded  out  the  less  progressive  and  weaker 
concerns,  but  even  the  survivors  were  far  behind  the  Eng- 
lish in  technique,  as  shown  by  the  fact  that  in  1860  they 
were  just  introducing  the  automatic  spindle  in  cotton 
spinning,  which  had  been  in  use  in  England  since  1830, 
in  1834  there  being  400,000  in  use  in  60  English  estab- 
lishments. The  only  thing  that  permitted  the  Germans 
to  compete  at  all  was  the  low  wages  paid.  The  higher 
wages  of  England,  however,  forced  the  manufacturers 
to  the  perfecting  of  labor-saving  machinery,  which  in  the 
long  run  had  a  greater  effect  in  cheapening  production 
than  low  wages.  Low  wages  are  responsible  for  the  long 
survival  of  domestic  production  in  Germany,  especially 
in  weaving. 

The  lower  tariff  after  1865  bore  hard  on  the  cotton 
industry  in  the  German  States;  while  Saxony  had  in  1861 
707,844  spindles,  in  1875  the  number  had  decreased  to 
471,387.  In  this  period  all  the  spinning  factories  driven 
by  water  power,  to  the  number  of  about  fifty,  failed.  By 
annexing  Alsace  and  Lorraine,  the  empire  gave  to  the 
German  manufacturers  strong  competitors  for  the  home 
market. 

Germany  was  very  late  in  changing  from  the  household 
to  the  factory  system  in  spinning  and  weaving.  Even  so 
late  as  the  middle  of  the  century,  the  greater  part  of  the 
spinning  and  weaving  was  done  outside  the  factories.  In 
1850  there  were  about  1,500,000  spindles  for  flax  spin- 
ning in  the  country,  of  which  number  only  65,000  were  in 
factories  (Sombart).  Weaving  survived  as  a  household 
industry  much  longer  than  spinning,  and  there  are  to-day 
about  100,000  hand  weavers,  most  of  whom,  however, 
are  producers  of  very  special  sorts  of  fabrics,  particularly 
silk  cloths. 

The  technical  improvements  in  spinning  machinery 
came  later  than  those  in  weaving  machinery.  At  the 
beginning  of  the  century,  ten  spinners  were  required  to 


GROWTH   OF  THE   VARIOUS   INDUSTRIES    65 

prepare  the  yarn  for  one  weaver,  and  so  great  was  the 
demand  for  yarn  that  even  soldiers  in  the  barracks 
were  employed  at  spinning;  in  1895  the  conditions  had 
so  altered  that  there  were  twice  as  many  persons  engaged 
in  weaving  as  in  spinning.  The  displacement  of  labor 
in  spinning  was  so  rapid  about  the  middle  of  the  cen- 
tury that  it  occasioned  much  distress  among  a  large  class, 
who  were  too  ignorant  and  miserable  to  change  their  oc- 
cupation. In  1849  there  were  84,000  independent  hand 
spinners,  and  in  1861  the  number  had  fallen  to  14,500 
(Pohle). 

Saxony  is  the  headquarters  for  the  cotton  industry  of 
Germany,  and  consumes  one  third  of  the  import  of  raw 
cotton.  Five  sixths  of  all  the  cotton  goods  manufactured 
in  the  country  are  consumed  at  home;  of  the  amount  ex- 
ported, England  takes  one  fifth,  the  balance  going  to  the 
United  States,  Russia,  Holland,  Switzerland,  and  Austria. 

The  rank  of  Germany  as  a  textile-producing  country, 
in  comparison  with  other  countries  in  1895,  is  shown  by 
the  following  table:  ^  — 


PRODUCTION   OF 

TEXTILES 

(000  omitted) 

Cottons     Woolens 

Silks        Linens 

Totxd 

United  Kingdom 
France 
Germany 
United  States 

$400,500   $308,500 
112,000     223,500 
177,000     211,000 
279,000     222,000 

$30,000   $157,000 

141,000       99,000 

82,500       72,500 

91,000      213,000 

$956,000 
575,500 
541,000 
805,000 

In  1840  England  consumed  55  to  60  per  cent  of  the 
raw  cotton  sold  in  the  world  market;  in  1900  only  25  per 
cent.  The  greatest  progress  in  cotton  manufacturing 
in  recent  times  has  been  made  in  those  countries  which 
produce  the  raw  cotton,  particularly  in  the  United  States, 
which  has  won  from  England  the  first  place  as  a  cotton- 
consuming  nation. 2 

•  Mulhall,  Dictionary  of  Statistics. 

^  Huber,  Deutschland  als  Indtistriestaat,  p.  435. 


66       INDUSTRIAL   PROGRESS   OF   GERMANY 

CONSUMPTION   OF   RAW   COTTON 

I  (In  tons) 

Average  for         Germany         England       United  States      E.  India 

1836-40  9,000  206,000  60,000             

1856-60  46,000  518,000  179,000  13,000 

1876-80  124,000  639,000  350,000  86,000 

1887-89  205,000  681,000  476,000  158,000 

1899-00  313,000  794,000  862,000  227,000 

The  importation  of  cotton  is  now  direct  to  Bremen, 
and  not  by  way  of  London,  as  was  the  case  twenty  years 
ago.  The  Bremen  Cotton  Exchange  is  the  most  important 
centre  for  the  cotton  trade  of  Germany  and  neighboring 
countries,  and  stands  next  to  Liverpool  as  a  world  market, 
Having  outstripped  Havre,  which  formerly  was  the  great 
continental  market. 

Germany  gets  practically  all  her  cotton  from  the  United 
States,  the  import  in  1903  being  as  follows :  — 

From  the  United  States  268,087  tons 

From  British  India  79,056 

From  Egypt  30,872 

The  fact  that  her  sources  of  supply  are  under  the  con- 
trol of  her  two  great  competitors  has  caused  the  German 
government  in  recent  years  to  attempt  the  introduction 
of  cotton  culture  in  the  German  colonies  in  Africa,  Not 
only  does  Germany  pay  a  heavy  tribute  to  these  nations, 
but  she  exposes  a  great  industry  to  the  chances  of  politi- 
cal and  economic  accidents,  such,  for  instance,  as  the 
Civil  War  blockade.  Experts  have  declared  the  colonies, 
especially  Togoland,  to  be  excellent  cotton-growing  ter- 
ritory, and  the  cotton  produced  there  has  graded  "mid- 
dling" and  "fully  middling,"  according  to  the  American 
standard. 

The  important  effect  which  the  textile  schools  are 
coming  to  have  in  promoting  the  industry  in  Germany 
is  suggested  by  the  following  quotation  from  the  Times 
articles  in  1903 :  — 


GROWTH   OF  THE   VARIOUS  INDUSTRIES     67 

"  Germans  have  a  particular  need  for  carefully  trained  ski! 
for  the  work,  because  they  are  not  naturally  inventive  or  gifted 
with  the  innate  sense  of  elegance  possessed  by  the  French.  Con- 
sequently the  manufacturers  give  liberal  support  to  the  textile 
schools,  and  further  encourage  them  by  giving  employment  to 
the  graduates.  There  is  no  doubt  that  it  pays  them.  A  manu- 
facturer was  showing  me  one  day  in  Elberfeld  a  length  of  dress 
material.  '  That  is  going  to  England  and  is  made  of  English 
material.  I  get  the  materials  from  England,  manufacture  them, 
and  send  them  back.  I  pay  the  carriage  both  ways,  and  yet  I 
can  sell  this  in  the  English  market.'  'How  ?'  'Well,  you  see,  this 
is  a  nice  design;  there  is  brains  in  it.' " 

Agriculture 

In  agriculture  we  have  the  one  exception  to  the  general 
rule  of  prosperity  in  German  industry.  Since  1875  the 
agricultural  conditions  have  been  very  unsatisfactory, 
and  the  agrarian  problem  is  the  source  of  the  most  serious 
difficulties  in  German  economics.  The  Agrarian  party 
is  often  able  to  wield  an  influence  quite  out  of  propor- 
tion to  its  numbers  in  favor  of  conservative  and  reaction- 
ary measures  which  are  regarded  as  hostile  to  the  other 
industrial  interests  of  the  country.  At  the  present  time 
its  power  is  so  great  that  the  recent  commercial  treaties 
concluded  with  Russia  and  Austria-Hungary  are  decidedly 
favorable  to  its  interests,  and  correspondingly  unfavor- 
able, to  the  other  industrial  interests  of  the  country.  Be- 
cause Germany  was  unwilling  to  grant  any  considerable 
concessions  to  the  importation  of  agricultural  products,  as 
she  had  done  in  the  treaties  which  had  just  expired,  she 
was  naturally  unable  to  gain  concessions  for  the  expor- 
tation of  manufactured  goods  to  the  treaty  countries. 

The  period  from  1840  to  1870  was  a  most  prosperous  one 
for  agriculture;  the  prices  of  products  rose  rapidly,  while 
the  cost  of  production,  chiefly  on  account  of  the  introduc- 
tion of  scientific  methods,  declined.  Consequently  the  value 
of  land  rose  proportionately  to  the  profits  of  the  business. 


68       INDUSTRIAL   PROGRESS   OF   GERMANY 

and  a  large  portion  of  it  was  encumbered  with  mortgages 
at  the  high  rate,  so  that  to-day  the  mortgages  on  the 
land  of  the  country  amount  to  about  three  fourths  of  its 
total  value.  After  the  seventies  a  great  change  took  place, 
and  since  that  time  a  chronic  depression  has  prevailed. 

The  principal  cause  of  this  depression  was  the  consider- 
able decline  in  the  price  of  agricultural  products  due  to  the 
competition  of  American  grains  and  meats.  The  enormous 
surplus  production  which  followed  the  opening  up  of  the 
trans-Mississippi  country  and  the  simultaneous  lowering 
of  both  land  and  ocean  freight  rates  started  a  stream  of 
grain  flowing  to  Europe  which  soon  came  to  be  the  con- 
trolling factor  of  prices.  The  fall  in  the  price  of  wheat 
from  1876  to  1898  amounted  to  14  per  cent,  that  of  barley 
to  11  per  cent,  and  that  of  rye  to  14  per  cent,  notwithstand- 
ing the  constantly  rising  tariff  rate,  which  on  wheat  rose 
from  10  marks  per  ton  in  1879  to  50  marks  per  ton  in  1887. 
If  there  had  been  no  tariff,  the  price  would  have  fallen 
40  to  50  per  cent  instead  of  14. 

During  this  time  the  wages  of  the  agricultural  laborers 
have  continually  advanced  and  great  numbers  have  been 
drawn  into  other  industries,  so  that  in  the  eastern  provinces 
where  hired  labor  is  depended  upon,  there  is  a  serious 
scarcity  of  laborers  during  the  busy  seasons,  which  is  only 
partially  alleviated  by  the  temporary  importation  of  Polish 
and  Russian  labor.  The  difficulty  is  increased  by  the  fact 
that  agriculture  is  constantly  becoming  more  intermittent, 
requiring  many  hands  for  short  periods  to  whom  it  can 
furnish  no  employment  for  the  remainder  of  the  time.  The 
introduction  of  the  steam  threshing  machine  has  increased 
this  difficulty,  since  threshing  formerly  employed  the  labor- 
ers during  most  of  the  winter. 

Another  cause  of  the  agrarian  crisis  can  be  traced  di- 
rectly to  the  agriculturists  themselves.  The  business  had 
been  pursued  so  long  in  an  unbusinesslike  fashion  that 
when  it  became  necessary  to  introduce  business  methods. 


GROWTH   OF  THE   VARIOUS   INDUSTRIES      69 

the  land-owner  was  found  sadly  wanting.  In  the  employ- 
ment of  capital,  especially  in  the  mortgaging  of  the  land 
to  secure  the  necessary  working  capital,  and  also  in  the 
marketing  of  the  product,  the  land-owners,  large  as  well  as 
small,  showed  themselves  to  be  very  poor  merchants.  Of 
late  there  has  been  a  great  improvement  in  this  respect, 
due  to  the  spread  of  education  among  the  agrarian  classes, 
and  to  the  cooperative  societies  which  have  been  organized 
for  all  sorts  of  beneficial  purposes,  often  by  the  direct 
assistance  of  the  state. 

Notwithstanding  the  great  changes  which  have  taken 
place  in  agriculture  during  the  century,  the  form  of  land- 
holding  has  altered  very  little.  The  renting  system  exists 
to  a  very  small  extent,  most  of  the  cultivation  being  carried 
on  directly  by  the  owners  of  the  land.  With  reference  to 
the  size  of  the  holdings  and  consequently  the  manner 
of  cultivation,  Germany  may  be  divided  into  three  divi- 
sions: one  division  includes  the  whole  eastern  portion  of 
the  empire,  where  the  prevailing  type  is  the  large  estate, 
owned  by  the  aristocratic  "  Junker  "  and  cultivated  with 
the  aid  of  hired  labor.  These  Prussian  "Junkers"  form 
the  nucleus  of  the  Agrarian  party,  and  possess  a  political 
power,  by  reason  of  their  superior  social  position,  quite 
out  of  proportion  to  their  numbers. 

A  second  division  would  include  northwest  Germany,  the 
middle  states,  and  Bavaria.  Here  the  prevailing  type  is 
the  peasant  farm  of  from  twenty-five  to  two  hundred  and 
fifty  acres,  cultivated  by  the  peasant  himself,  with  the  assist- 
ance of  one  or  more  hired  men,  perhaps. 

The  third  division  would  include  southwest  Germany, 
where  the  land  is  cultivated  in  very  small  parcels,  and 
where  most  of  the  holdings  are  less  than  fifteen  acres  in 
size.  By  very  intensive  cultivation,  these  small  parcels  of 
land  are  made  to  support  the  peasant  family.  More  than 
four  fifths  of  the  whole  Rhincland  is  cultivated  in  farms 
of  less  than  twelve  and  one  half  acres. 


70       INDUSTRIAL   PROGRESS   OF   GERMANY 

Taken  as  a  whole,  Germany  is  distinctly  a  peasant  land, 
in  some  parts  of  which  there  are  large  estates,  although 
these  do  not  occupy  one  fourth  of  the  area,  if  we  reckon  in 
this  class  all  holdings  of  over  two  hundred  and  fifty  acres. 

Two  industries,  beet-sugar  manufacture  and  distilling 
of  spirits,  stand  in  very  close  relation  to  agriculture.  A 
large  portion  of  the  prosperity  prior  to  the  seventies  was 
due  to  these  branches,  and  a  large  part  of  the  decline  has 
also  been  due  to  the  sinking  price  of  these  products.  The 
price  of  beet-sugar  in  London  has  fallen  from  $5.43  per 
cwt.  in  1876  to  $2.14  in  1897. 

The  Development  of  Industrial  Organization 

In  the  first  chapter  we  have  spoken  of  the  tendency  in 
the  development  of  capitalism  for  the  industrial  units  to 
become  larger  as  the  industry  progresses  and  the  organi- 
zation to  become  better  articulated.  The  development  of 
the  large  industrial  organization  came  a  generation  later  in 
Germany  than  in  England  and  Belgium  for  reasons  which 
we  have  already  discussed :  lack  of  capital  during  the  first 
half  of  the  century,  lack  of  a  uniform  market  area,  and  the 
slow  introduction  of  improved  means  of  transportation,  to- 
gether with  the  greater  conservatism  of  the  people.  Even 
to-day  the  proportion  of  small  enterprises  is  still  relatively 
large  in  Germany.  In  the  United  States  the  small  handi- 
craft industries  had  not  got  so  well  established  before  the 
organizing  tendency  began.  In  Austria  and  Italy  the  tend- 
ency is  artificially  restrained  by  law. 

The  following  fiffures  from  the  industrial  censuses  of 
Germany  show  the  tendency  toward  industrial  organiza- 
tion during  the  period  1882-95 :  — 

Persons  engaged  independently  in  manufacturing,  building,  mining 
1882  2,209,000  =  48.3  per  1000  of  population 
1895  2,061,000  =  39.6    "      "  Decrease  18% 

Persons  employed  as  laborers  and  apprentices 
1882  3,606,000  =    79.7  per  1000 
1895  5,671,000  =  107.4     "      "  Increase  35% 


GROWTH   OF  THE  VARIOUS   INDUSTRIES     71 

Persons  employed  as  technical  and  financial  managers,  assistants,  etc. 
1882  118,000  =  2.61  per  1000 
1895  268,000  =  5.15    "     "  Increase  97% 

Small  businesses,  without  assistants  or  motor  power 
1882  1,430,000  =  31.3  per  1000 
1895  1,237,000=25  7    "       "  Decrease  24% 

Concerns  with  less  than  five  helpers,  employees 
1882  745,000  =  16.3  per  1000 
1895  752,000  =  14.4    "      "  Decrease  11.6% 

Concerns  employing  from  five  to  ten  people,  employees 
1882  49,200  =  1.08  per  1000 
1895  77,900  =  1.5      "     "  Increase  39% 

Concerns  employing  from  eleven  to  fifty  people,  employees 
1882  35,800  =  0.78  per  1000 
1895  61,600  =  1.18    "      "  Increase  51% 

Concerns  employing  over  fifty  persons,  employees 
1882    9,500  =  0.205  per  1000 
1895  17,900  =  0.345   "      "  Increase  68% 

Concerns  employing  over  1000  persons,  employees 
1882  123  businesses 
1895  248         "  Ijicrease  78% 

Distribution  of  the   industrially  active  population  in 
industries  according  to  number  of  employees :  — 


Klein-befrieb. 

Mittel-betrieb. 

Gross-betrieb. 

Less  than  ten 

From  eleven  to 

More  than 

employees 

fifty  employees 

fifty  employees 

1882 

61% 

13% 

26% 

1895 

47 

17 

36 

The  development  of  capitalism  involves,  as  well  as 
increase  in  the  number  of  employees  in  each  concern, 
increase  in  the  number  of  stock  companies  as  against  in- 
dividual and  partnership  ownership.* 

1886     1337  stock  companies  with  capital  of  1,904,000  marks. 
1896     2307      "  "  "  "       "3,521,000 

Increase  in  the  number  of  stock  companies,  73% 
Increase  in  the  amount  of  capital  of  companies,  84% 

Together  with  this  growth  in  size  of  the  industrial  units, 
there  has  come  in  the  last  decade  a  tendency  for  the  in- 

•  Troeltsch,  Die  Neusten  Veranderungen  im  Devischen  Wirtschafit- 
hben,  p.  73  et  seq. 


72       INDUSTRIAL  PROGRESS   OF   GERMANY 

dividual  concerns  to  unite  their  interests  in  a  syndicate 
or  Kartelle.  The  German  Kartelle  is  a  combination  or 
pooHng  of  interests  quite  Hke  the  American  Trust  in  its 
original  form;  that  is,  each  of  the  concerns  keeps  its  in- 
dividuality and  its  legal  personality,  but  for  certain  pur- 
poses submits  to  the  control  of  a  committee  or  board 
representing  the  interests  of  all.  The  Anti-Trust  Law, 
which  made  such  combination  illegal,  forced  a  complete 
merging  of  the  individual  companies  into  one  great  cor- 
poration in  America;  the  German  government  has  taken 
no  such  measure,  and  the  companies  have  not  been  com- 
pelled to  take  this  final  step. 

Many  of  the  German  Kartellen  were  organized  in  time 
of  industrial  depression,  particularly  in  1900,  for  the  pur- 
pose of  safeguarding  the  interest  of  the  various  industries 
which  were  seriously  threatened.  By  carefully  adapting 
production  to  consumption,  they  have  diminished  the 
danger  of  crisis,  and  thus  they  perform  a  public  service  of 
no  little  value.  Stock-watering  and  speculation  have  not 
been  so  conspicuous  in  connection  with  their  organization 
as  in  the  American  trust-promoting.  None  of  the  Kar- 
tellen are  yet  strong  enough  to  hold  a  complete  monopoly 
of  their  particular  product  by  controlling  at  once  the  mar- 
kets for  raw  material  and  for  the  finished  product.  The 
benefits  of  organization  have  been  so  conspicuous  in  com- 
parison with  the  evils  that  hostility  to  them  on  the  part  of 
the  government  and  the  people  has  not  yet  developed 
as  with  us  and  in  England.  The  German  sees  in  the  Kar- 
telle a  power  which  is  able  to  promote  the  export  interests 
of  the  empire,  and  introduce  greater  steadiness  in  the 
domestic  industrial  world. 

The  heaviest  charge  against  the  Kartellen  is  that  they 
sell  cheaper  abroad  than  at  home.  This  undeniable  fact 
has  contributed  much  to  whatever  in  the  public  opinion 
is  unfavorable  to  them.  The  coal  syndicate,  for  instance, 
delivers  coal  in  Hamburg  for  export  at  a  much  cheaper 


GROWTH   OF  THE   VARIOUS   INDUSTRIES    73 

rate  than  it  demands  from  the  industries  near  the  mines, 
in  spite  of  the  fact  that  Hamburg  is  quite  a  distance  away, 
and  the  transportation  costs  a  considerable  sum.  The  coke 
syndicate  sells  coke  in  Austria  at  $2.20  per  ton  cheaper 
than  at  home.  The  wire-nail  syndicate  furnishes  its  pro- 
duct to  foreign  customers  for  $35  per  ton,  while  the 
price  for  the  same  goods  in  the  domestic  markets  is  $62.50 
per  ton.  The  sugar  syndicate,  which  was  formed  in  1900 
and  controls  98  per  cent  of  the  production,  has  jfixed  the 
price  of  beet-sugar  at  $3.93  per  cwt.  in  Germany,  and  at 
$2.97  per  cwt.  abroad.^ 

In  bad  times  it  is  the  custom  of  the  syndicates  to*'  dump  " 
quantities  of  goods  on  the  foreign  markets  at  low  prices 
to  relieve  the  home  market  from  over-production,  but 
in  most  cases  it  would  be  incorrect  to  say  that  they  sell 
abroad  at  a  loss,  and  make  it  up  by  higher  prices  at  home. 

Though  the  effect  of  the  syndicates  on  the  welfare  of 
the  German  workingman  is  an  unsettled  question,  it  may 
be  said  that  the  advantages  predominate  over  the  disad- 
vantages, for  if  the  organizations  are  successful  In  creating 
more  favorable  conditions  at  home  for  the  industry,  a 
steadier  rate  of  production,  and  better  prices,  these  things 
must  advantage  the  workingman.  It  is  likely  also  that  the 
interests  of  the  laboring  classes  will  be  better  cared  for 
under  the  control  of  the  syndicates,  since  the  employers 
are  more  likely  to  be  represented  by  men  of  broad  views, 
who  see  that  it  is  to  the  permanent  interest  of  the  industry 
to  keep  on  good  terms  with  employees.  Moreover,  the 
large  concerns  are  much  better  able  to  introduce  measures 
and  arrangements  for  the  health  and  comfort  of  the  em- 
ployees than  are  the  smaller  ones.  A  firm  like  that  of  the 
Krupps  can  erect  model  dwellings,  churches,  and  libraries, 
in  the  interest  of  the  workingman,  much  easier  than  the 
small  employer. 

*  Dr.  Kreiitzkam  in  the  Handbvch  der  WirUchaJtskunde  Devischlands, 
vol.  iv,  p.  677. 


CHAPTER  V 

THE   INDUSTRIAL   CAPACITY   OF  THE   GERMAN 

After  having  remained  backward  and  unprogressive  dur- 
ing two  thirds  of  the  nineteenth  century,  while  her  chief 
competitor  was  developing  and  dominating  industry,  Ger- 
many at  last  entered  upon  a  course  of  industrial  pro- 
gress, slowly  at  first,  but  in  the  last  decade  at  so  rapid  a 
rate  that  she  stands  with  England  and  the  United  States 
as  one  of  the  industrial  powers  of  the  earth.  Having 
established  this  interesting  fact,  we  shall  now  attempt  to 
discover  the  causes  which  explain  it. 

We  have  already  given  a  few  reasons  in  chapter  ii  why 
Germany  failed  to  follow  England  in  industrial  develop- 
ment up  to  1871;  naturally,  the  removal  of  some  of  these 
conditions  —  the  destruction  to  wealth  wrought  by  hostile 
invasions,  antiquated  economic  institutions,  and  the  restric- 
tions on  trade  and  industry  which  arose  from  the  lack  of 
political  unity  —  will  explain  to  some  extent  the  recent 
progress. 

There  is  no  lack  of  reasons  offered  for  the  industrial 
prosperity  of  Germany,  and  the  investigator  meets  them 
on  every  hand;  but  as  in  all  cases  involving  a  plurality 
of  causes,  the  diflSculty  comes  in  apportioning  to  each  of 
the  contributing  causes  its  proper  weight.  Some  of  the 
writers  who  advocate  a  high  protective  tariff,  English 
as  well  as  German,  as  for  instance  Dr.  Rudolph  Martin 
in  his  Die  Eisenindustrie  in  ihrem  Kampf  um  den  Absatz- 
markt,  are  prone  to  ascribe  the  largest  part  of  the  indus- 
trial development  to  the  fact  that  Germany  abandoned  her 
free-trade  policy  in  1879,  and  the  statistical  tables  offered 


INDUSTRIAL   CAPACITY   OF   THE    GERMAN    75 

in  evidence  appear  to  prove  their  arguments,  especially  if 
the  figures  do  not  extend  over  many  industries.  One  of 
the  favorite  arguments  for  the  fiscal  policy  of  Mr.  Cham- 
berlain in  England  is  the  development  of  certain  German 
industries  under  a  high  tariff.  A  very  little  study,  how- 
ever, convinces  one  that  the  true  causes  lie  much  deeper 
than  this,  and  it  is  the  more  fundamental  causes  that  we 
shall  discuss  in  the  following  chapters. 

The  economic  character  of  a  people,  their  aptitude  for 
certain  forms  of  commerce  and  industry,  for  instance, 
is  both  the  cause  and  effect  of  economic  conditions.  Those 
who  would  explain  all  industrial  phenomena  from  the 
national  characteristics  of  a  people  overlook  the  fact  that 
these  characteristics  are  themselves  to  a  great  extent  the 
consequences  of  past  conditions.  However,  changes  in 
the  national  character  are  slow  and  the  result  of  economic 
conditions  of  long  standing,  and  we  shall  not  fall  into  seri- 
ous error  if,  in  searching  for  the  causes  of  the  industrial 
changes  of  the  past  score  of  years,  we  regard  the  charac- 
teristics of  the  German  as  primary  causes. 

Capitalistic  production  requires,  as  we  well  know,  the 
existence  of  two  classes:  (1)  a  class  composed  of  persons 
having  knowledge  of  the  technique  of  production  and 
of  business  management,  with  organizing  and  executive 
ability,  together  with  the  control  of  capital;  (2)  a  class 
composed  of  persons  dependent  upon  their  labor  for  a  live- 
lihood, who  for  wages  are  willing  to  place  their  services  at 
the  disposal  of  the  entrepreneur  and  become  parts  of  the 
industrial  organization.  All  the  population  of  even  the 
most  industrial  nations  do  not  fall  into  one  or  the  other 
of  these  classes,  notwithstanding  the  statement  of  Karl 
Marx ;  but  in  studying  the  industrial  capacity  of  a  people, 
we  must  confine  our  observation  to  those  qualities  which 
distinguish  them  either  as  entrepreneurs  or  as  wage-earners. 

The  classification  of  the  population  as  entrepreneur  and 
proletariat,  or  wage-earners,  is  synchronous  with  the  rise 


76       INDUSTRIAL   PROGRESS   OF   GERMANY 

of  the  capitalistic  system.  The  former  classification  of  the 
industrial  population  into  masters,  journeymen,  and  ap- 
prentices was  something  entirely  different.  The  journey- 
men and  apprentices  received  wages,  it  is  true,  but  their 
relation  to  the  master  was  different  from  the  relation  of 
the  modern  workman  to  his  employer;  they  were  members 
of  the  master's  family  and  had  the  hope  of  becoming 
masters  themselves  at  some  future  time,  though  with  the 
development  of  the  guild  this  hope  became  less  and  less, 
as  the  masters  were  able  to  acquire  a  closer  monopoly  of 
the  trade.  The  modern  employee  has  no  hope  or  expec- 
tation of  becoming  an  entrepreneur,  and  usually  his  work 
gives  him  no  training  whatever  for  such  a  function.  Such 
diverse  qualifications  are  required  in  employers  and  em- 
ployees that  they  must  be  discussed  from  the  two  points 
of  view. 

One  of  the  features  common  to  the  Germanic  races 
and  distinguishing  them  from  the  Latin  especially  is 
physical  vigor  and  power  of  endurance.  A  severe  climate 
compelled  the  primitive  German  to  make  large  provision 
of  food  and  clothing  for  the  winter,  which  could  be  ac- 
quired from  the  unfruitful  soil  of  his  habitat  only  by  the 
most  strenuous  and  patient  toil.  Centuries  of  struggle 
with  nature  for  a  livelihood,  and  with  other  nations  in 
frequent  wars,  have  bred  in  the  race  a  hardihood  and 
endurance  which  are  of  great  industrial  advantage,  espe- 
cially in  the  laboring  class. 

Germany  leads  all  the  European  nations  to-day  in  the 
annual  rate  of  increase  of  population,  although  the  birth 
rate  in  that  country  is  lower  than  in  some  others,  Russia 
having  495  per  10,000,  Austria  366,  and  Hungary  379. 
The  greater  increase  of  population  of  Germany,  in  spite 
of  a  lower  birth  rate,  is  explained  by  the  small  death  rate 
in  comparison  with  the  countries  mentioned.  Germany 
has  363  births  annually  per  10,000  of  population,  while 
France,  at  the  other  end  of  the  scale,  has  but  226  per  10,000. 


INDUSTRIAL   CAPACITY   OF  THE   GERMAN    77 

The  meaning  of  this  difference  shows  up  more  clearly 
when  its  results  are  projected  through  a  century;  in  1820 
France  had  four  million  more  population  than  Germany; 
now  Germany  has  twenty  million  more  than  France,  not- 
withstanding the  drain  of  emigration  which  the  former 
country  has  endured  and  from  which  France  has  been 
practically  free.  In  less  than  a  hundred  years  the  rela- 
tion has  so  changed  that  France,  which  was  then  the 
larger,  is  now  only  two  thirds  the  size  of  Germany  as  far 
as  population  is  concerned. 

The  importance  of  the  increase  of  numbers  of  the  Ger- 
man nation  becomes  more  apparent  when  we  trace  out  its 
effects  on  the  industrial  character  of  the  people.  Nations 
make  progress,  as  a  rule,  only  when  forced  to  do  so  by 
compelling  circumstances.  The  pressure  of  an  increasing 
population  on  the  resources  of  a  country  is  one  of  the 
most  compelling  causes  of  industrial  progress.  When  the 
average  number  of  children  in  a  family  is  two,  the  sons 
may  step  into  the  places  of  the  fathers  and,  without  any 
initiative  on  their  own  part,  occupy  as  comfortable  a  place 
in  life  at  least  as  their  fathers  did,  and  continue  to  live  in  the 
manner  to  which  they  have  been  accustomed.  Thus  it  is 
with  the  peasant  population  of  France:  the  parents  en- 
deavor to  leave  as  large  a  property  as  possible  to  their  chil- 
dren, and  it  is  not  surprising  that  the  rising  generation 
should  be  content  to  step  into  the  places  of  their  fathers, 
continuing  to  live  in  the  same  conservative  way.  There  is 
no  necessity  for  innovations  involving  risk,  worry,  and  dis- 
appointment, and  none  for  leaving  agriculture  to  enter 
other  industries.  Therefore  there  is  lacking  in  France  the 
pressure  of  an  increasing  proletariat  demanding  industrial 
employment. 

It  is  otherwise  in  Germany,  where  larger  families  pre- 
vail. Each  child  can  hope  to  inherit  but  a  portion  of  the 
paternal  estate,  and  unless  he  is  able  to  acquire  an  income 
independently  of  that  which  comes  from  his  inheritance. 


78       INDUSTRIAL  PROGRESS   OF   GERMANY 

he  must  inevitably  fall  into  a  lower  economic  class  than 
that  into  which  he  has  been  born.  In  a  country  of  such 
rigid  social  classes  as  Germany,  this  economic  degradation 
is  strenuously  resisted. 

So  it  comes  about  that  the  father,  instead  of  striving 
to  leave  large  inheritances  to  his  children,  directs  his  ef- 
forts to  equipping  them  as  well  as  he  can  by  training  and 
education  for  their  future  careers.  In  the  districts  where 
the  small  peasant-holdings,  which  are  too  small  to  divide, 
prevail,  one  son  usually  succeeds  the  father  and  mort- 
gages the  estate  to  satisfy  the  claims  of  the  co-heirs.  In 
this  practice  we  see  one  of  the  reasons  why  the  land  of 
Germany  is  mortgaged  for  over  three  fourths  of  its  value. 
The  other  sons  seek  places  in  the  cities  and  manufactur- 
ing centres,  and  recruit  the  army  of  wage-laborers.  Here 
we  have  present  one  of  the  requirements  of  capitalistic 
production,  a  proletariat  clamoring  for  employment. 

A  difference  in  the  size  of  families  in  the  upper  classes 
also  has  its  effect  on  industrial  progress.  Among  the  chil- 
dren of  these  classes  in  Germany  we  find  the  struggle  to 
retain  a  place  in  the  economic  class  into  which  they  were 
bom  even  more  intense  than  in  the  lower  classes.  The 
father,  unable  to  bequeath  a  large  property  to  each  of  his 
numerous  sons,  is  the  much  more  concerned  to  provide 
them  with  the  best  possible  education,  an  education  which 
shall  be  of  economic  advantage.  Fifteen  or  twenty  years 
ago,  the  only  proper  careers  were  thought  to  be  in  the  army, 
civil  service,  the  church,  or  in  the  professions;  now,  the 
expansion  of  industry  and  the  broadening  of  social  ideas, 
together  with  the  opportunity  for  higher  education  in  indus- 
trial and  commercial  affairs,  —  an  education  which  ranks 
socially  with  that  of  the  classical  universities,  —  have  con- 
ferred upon  business  pursuits  a  dignity  which  makes  them 
attractive  to  the  upper  classes.  The  young  men  of  this 
class,  educated  and  trained  in  the  most  thorough  manner, 
enter  into  industry  and  commerce  with  the  hope  of  becom- 


INDUSTRIAL   CAPACITY   OF  THE    GERMAN    79 

ing  entrepreneurs.  They  are  watching  for  every  oppor- 
tunity to  advance  themselves  or  to  engage  in  independent 
undertakings. 

In  our  country  we  know  nothing  of  the  earnestness 
with  which  these  young  Germans  struggle  to  maintain 
themselves  in  their  social  class.  It  is  not  so  easy  to  change 
from  one  business  to  another  as  with  us,  and  discharge 
from  any  position  under  circumstances  which  make 
difficult  reemployment  in  the  same  branch  is  equivalent 
to  defeat.  If  a  young  clerk  loses  his  position  in  a  business 
for  which  he  has  undergone  a  long  training,  and  is  unable 
to  find  immediate  employment,  he  has  no  recourse  to 
temporary  employment  in  unskilled  manual  labor.  The 
unemployed  clerk  would  almost  rather  starve  than  accept 
a  job  of  shoveling  snow  and  thereby  lose  his  claim  to  a 
place  in  his  social  class;  employers  would  hesitate  long 
before  engaging  a  man  as  a  clerk  who  had  been,  even 
temporarily,  an  "  Arbeiter." 

In  a  land  like  France,  where  the  population  is  nearly 
stationary,  and  where  in  the  average  case  the  son  inherits 
the  whole  of  the  estate  of  the  father,  together  with  his 
social  position,  there  will  be  lacking  this  class  of  men, 
eagerly  watching  their  chance  to  rise  in  their  business, 
and  accepting  every  opportunity  for  education  and  train- 
ing in  the  industry  which  they  have  chosen.  The  condi- 
tion prevailing  among  the  French  is  suggested  by  a  remark 
of  Madame  de  Girardin  quoted  by  Blondel:^  "Chacun 
en  France  meprise  son  metier;  on  a  tou jours  mieux  a 
faire  que  son  devoir."  The  German  does  not  feel  above 
his  business,  but  is  under  the  strongest  incentives  to  master 
it  and  to  advance  himself  in  it. 

Thus  the  increasing  population  recruits  the  economic 
classes  necessary  to  the  development  of  capitalistic  indus- 
try.   The  entrepreneur  class  is  constantly  receiving  acces- 

*  M.  Georg  Blondel,  VEssar  Indvstriel  et  Commercial  du  PewpU 
AUemande,  p.  112.  Paris:  Larose  &  Cie.   1898. 


80        INDUSTRIAL   PROGRESS   OF   GERMANY 

sions  of  the  most  enterprising  and  the  best  trained  young 
men  of  the  nation;  the  laboring  class  is  ever  increasing 
in  numbers,  and  there  is  always  at  hand  an  army  of  men 
willing  to  work  long  hours  for  a  scanty  wage. 

At  the  same  time,  this  growing  population  is  furnish- 
ing customers  for  home  industries  and  foreign  food-stuffs, 
which  must  be  paid  for  by  the  products  of  home  indus- 
tries. The  increase  in  the  size  of  the  home  markets 
enables  the  industries  to  produce  on  a  large  scale,  and 
consequently,  in  most  industries,  cheaper,  thereby  giving 
them  greater  competitive  power  in  the  foreign  markets  for 
the  surplus  of  German  manufactured  goods. 

The  native  hardihood  and  patient  endurance  of  the 
German  race  has  been  preserved  by  the  hard  conditions  of 
life  under  which  it  has  lived.  The  peasant  has  had  to  work 
long  and  hard  for  what  little  he  has  been  able  to  wring  from 
the  reluctant  soil,  and  until  recent  years  with  the  broader 
social  ideas  which  came  with  the  centralized  administra- 
tion, the  governments  did  not  give  much  thought  to  lighten- 
ing his  burdens,  and  many  of  them  deliberately  exploited 
their  subjects.  The  German  has  been  brought  up  to  be- 
lieve that  he  must  work  hard  for  the  barest  subsistence. 

That  portion  of  the  proletariat  which  does  not  come 
from  the  peasant  class  springs  from  the  artisan  (Hand- 
werker)  class,  which  through  the  century  have  slowly 
yielded  to  the  encroaching  capitalistic  system,  giving  up 
their  trade  only  when  literally  starved  out.  Like  the 
peasants,  they  have  been  accustomed  to  labor  fourteen 
or  more  hours  per  day  for  the  barest  livelihood. 

In  spite  of  the  widespread  Social  Democracy  and  the 
social  unrest  which  prevails  in  Germany,  as  well  as  every- 
where else,  there  is  reason  to  believe  that  the  German 
workingman  is  more  submissive  and  content  than  the 
American,  at  least.  The  restrictive  ordinances  of  the  state 
and  the  guilds  in  agriculture  and  manufacturing  which 
prevailed  until  far  into  the  century  have  bred  out  of  him 


INDUSTRIAL    CAPACITY    OF   THE    GERMAN     81 

much  initiative;  his  ancestors  were  either  bound  to  the 
soil  under  obhgations  of  service,  or  were  cooped  up  in  the 
towns  under  guild  regulations  which  deprived  them  of  all 
industrial  freedom.  Moreover,  the  two-year  service  in  the 
army,  absolutely  subordinated  to  the  will  of  the  officers, 
goes  far  to  suppress  in  the  rising  generation  any  tendency 
to  independence  in  thought  or  action. 

The  German  Empire  is  noted  for  having  one  of  the 
most  paternal  of  governments.  The  Manchester  free-trade, 
laissez-faire  ideas,  which  attained  such  vogue  in  the  mid- 
dle of  the  century,  never  took  deep  root  in  the  German 
mind,  and  with  the  establishment  of  a  strong,  unified  im- 
perial government,  the  German  easily  fell  back  into  the 
habit  of  expecting  the  state  to  do  things  for  him.  He  is 
essentially  law-abiding  by  nature,  in  which  quality  he  con- 
trasts most  decidedly  with  the  American.  He  has  little 
of  that  sense  of  personal  liberty  which  so  strongly  char- 
acterizes the  Englishman  and  his  descendants  in  all  parts 
of  the  world.  The  German  is  a  great  grumbler,  and  is 
always  criticising,  but  his  dissatisfaction  goes  no  further 
than  the  expression  of  opinion.  That  a  thing  is  "  verboten  " 
is  sufficient  for  him;  he  does  not  hesitate  to  obey  until  he 
has  inquired  the  reason  for  the  prohibition,  even  though 
it  seriously  interferes  with  his  comfort.  The  American 
in  Germany  is  at  first  mightily  aggrieved  over  the  multi- 
tude of  petty  ordinances  which  seem  to  restrict  him  on 
every  side,  but  after  a  while  it  dawns  upon  him  that  they 
do  not  hinder  him  from  doing  anything  that  is  really  neces- 
sary for  his  comfort,  but,  on  the  other  hand,  that  they  do 
remove  many  of  the  small  annoyances  of  life.  Having 
thus  once  come  to  a  different  point  of  view,  he  perceives 
many  things  which  he  would  gladly  see  transplanted  to 
America. 

Perhaps  the  reason  why  the  German  is  so  law-abiding 
is  because  the  German  laws  and  ordinances,  since  they 
are  meant  to  be  enforced,  are  more  carefully  drawn  than 


82       INDUSTRIAL   PROGRESS   OF   GERMANY 

with  us.  Over  there  they  have  not  yet  made  the  twofold 
classification  of  legislation  as  we  have  done,  into  laws 
"  to  be  enforced  "  (occasionally)  and  laws  "  not  to  be  en- 
forced." May  not  a  large  part  of  this  respect  for  law  on 
the  part  of  the  German  be  due  to  the  respectability  of  the 
laws? 

The  national  trait  of  obedience  is  fostered  by  the  mili- 
tary system.  Practically  every  male  German  must  pass 
through  the  army;  most  of  the  young  men  must  spend 
two  years  in  the  barracks  in  a  part  of  the  empire  distant 
from  their  homes  and  absolutely  under  the  authority  of 
the  officers. 

The  German  army  officers  form  a  distinct,  privileged 
social  caste,  living  under  its  own  special  code  of  laws  and 
amenable  to  its  own  courts.  Until  1891  the  proceedings 
of  these  courts  were  not  made  public.  It  is  extremely 
difficult  for  the  common  soldier  to  make  an  appeal  against 
the  superior  officer,  even  in  cases  of  extreme  tyranny  and 
brutality. 

For  two  years,  therefore,  the  German  is  trained  in  un- 
questioning obedience  to  authority,  and  his  personality 
is  completely  merged  in  the  system.  The  traits  acquired 
in  the  barracks  are  taken  into  industry  when  his  term  of 
service  has  expired. 

As  modern  capitalism  develops,  it  assumes  more  and 
more  the  aspect  of  a  great  system  in  which  the  individuality 
of  the  men  is  sacrificed.  The  operation  of  a  large  manu- 
facturing plant  approximates  more  and  more  to  the  routine 
of  the  army;  with  the  perfection  of  machinery,  the  human 
labor  comes  to  resemble  the  drill  of  the  soldier,  monoto- 
nous and  mechanical.  Patient  toil,  endurance,  and  obedi- 
ence are  the  qualities  fostered  in  the  army  and  utilized  in 
industry.  The  capitalist  could  scarcely  ask  for  a  better 
training  school  for  his  employees. 

The  army  is  also  a  promoter  of  the  migration  of  the 
people  from  the  land  to  the  cities,  from  agriculture  to 


INDUSTRIAL   CAPACITY   OF  THE   GERMAN     83 

manufacturing  and  commerce.  It  is  a  rule  of  the  military 
authorities  to  station  the  rural  recruits  in  the  city  barracks, 
although  of  late  years  they  have  avoided  quartering  them 
in  the  industrial  centres  where  Social  Democracy  is  strong. 
In  his  period  of  service,  the  young  peasant  sees  enough 
of  the  city  and  its  distractions  to  become  discontented 
with  the  slow  life  of  the  country,  and  he  is  likely  to  seize 
the  first  opportunity  to  join  the  mass  of  city  wage-earners. 

Whatever  may  be  our  opinion  of  the  military  system 
of  Germany  as  a  social  and  political  institution,  we  are 
forced  to  the  conclusion  that  the  army,  burdensome  as  it 
is  to  the  country  as  a  whole,  ^  and  unlovely  as  are  some  of 
its  features,  must  be  regarded  as  being  distinctly  favor- 
able to  industrial  progress. 

A  German  youth  who  has  completed  six  years  of 
the  nine-year  gymnasium  course,  or  who  has  received  an 
equivalent  education  in  the  Mittlereschulen  and  has  passed 
a  state  examination  corresponding  somewhat  roughly  to 
our  college  entrance  examinations,  though  perhaps  requir- 
ing somewhat  less  than  the  examinations  for  admittance 
to  our  best  universities,  is  required  to  serve  but  one  year 
in  the  army,  under  somewhat  more  favorable  conditions 
than  the  common  two-year  soldier.  He  may  choose  the 
regiment  in  which  he  is  to  serve,  and  may  live  at  home 
if  possible,  as  over  90  per  cent  of  them  do.  To  be  sure, 
he  is  a  volunteer  (Freiwilliger),  and  does  not  receive  the 
pay  of  the  two-year  soldier,  twenty-four  pfennigs  (six 
cents)  per  day.  Furthermore  he  must  feed  and  clothe 
himself,  except  for  a  period  of  six  weeks,  when  he  is 
compelled  to  live  in  the  barracks  and  share  the  lot  of 
the  others.  Beside  those  who  have  the  educational  quali- 
fication mentioned  above,  the   commissioners   in  charge 

*  Germany  expended  for  the  year  ending  March  31,  1904,  on  her  mili- 
tary establishment,  $143,949,500.  Her  expenditures  for  the  navy  amount 
to  $23,317,250  annually.  The  ex-pense  of  the  army  alone  is  one  fourth 
of  all  the  expenditures  of  the  country,  which  amounted  in  the  year  1904 
to  $499,307,500.    Statesman's  Year  Book,  1904,  p.  674. 


84       INDUSTRIAL  PROGRESS   OF   GERMANY 

have  the  authority  to  grant  the  Einjdhriger  certificate  to 
those  who  lack  the  necessary  education,  but  in  its  place 
have  displayed  unusual  ability  in  artistic  or  industrial 
lines,  such  as  the  completion  of  a  piece  of  work  especially 
good,  or  the  invention  of  a  useful  device. 

The  possession  of  the  one-year-service  certificate  raises 
its  holder  into  a  higher  social  class,  and  is  a  distinction 
most  highly  prized.  To  become  an  Einjdhriger  is  the 
ambition  of  the  young  German,  and  is  a  most  powerful 
incentive  to  education.  It  has  come  to  stand  for  a  very 
definite  standard  of  education  or  ability,  and  is  demanded 
by  most  employers  in  applicants  for  positions  involving 
more  than  manual  skill. 

Nature  and  training,  therefore,  fit  the  German  to  be- 
come a  part  of  an  organization,  whether  it  be  the  state 
or  a  great  industrial  concern.  Personal  liberty,  independ- 
ence, and  initiative  are  repressed,  and  obedience,  patience, 
and  thorough  training  for  his  position  are  fostered.  The 
sense  of  personal  liberty  is  subordinate  to  a  strong  sense 
of  duty.  Professor  Sombart  cites  this  as  one  of  the  great 
distinctions  between  the  German  and  the  I^atin  races :  the 
former  have  a  strongly  developed  ethical  and  the  latter 
a  strongly  developed  cesthetic  sense.  Those  who  saw  the 
German  exhibit  at  the  St.  Louis  World's  Exposition 
will  be  inclined  to  challenge  this  statement,  which  implies 
that  the  German  is  lacking  in  artistic  sense.  This  splen- 
did development  of  art,  and  especially  of  industrial  art, 
is  something  comparatively  recent,  however,  and  the 
result  of  that  thorough  and  patient  training  with  which 
the  German  sets  out  to  attain  a  desired  end.  By  nature 
there  is  no  doubt  that  the  German  is  inferior  to  the  French- 
man in  artistic  skill,  but  he  has  been  able  to  overcome  this 
disadvantage  in  a  systematic  way,  especially  by  the  es- 
tablishment of  schools  of  industrial  art. 

It  is  this  sense  of  duty,  this  Pflichtgefilhl,  that  makes 
the  German  a  patriotic,  law-abiding  citizen  and  an  incor- 


INDUSTRIAL   CAPACITY   OF  THE   GERMAN    85 

ruptible  officer.  While  the  sins  of  the  army  are  many,  and 
many  of  its  rules  and  practices,  especially  the  officers'  code 
of  honor,  would  hardly  be  tolerated  in  the  United  States, 
yet  the  integrity  of  the  officers  is  never  questioned.  The 
administration  of  the  civil  service  is  above  suspicion,  and 
an  "  embalmed  beef  "  scandal  would  be  impossible  there. 

This  same  honesty  and  faithfulness  on  the  part  of  the 
officers  and  employees  in  private  industrial  administra- 
tion is  also  more  general  there  than  with  us.  As  the  Ger- 
man is  well  qualified  to  fill  his  place  as  a  small  wheel  in 
the  great  machine  of  the  state,  so  is  he  equally  well  quali- 
fied to  fill  a  similar  position  in  a  great  industrial  organiza- 
tion, whether  it  be  as  officer  or  as  private.  As  the  form  of 
business  enterprise  develops  from  the  partnership  to  the 
stock  company,  and  from  the  stock  company  to  the  syn- 
dicate and  trust,  it  assumes  more  and  more  the  character 
of  a  public  affair,  and  the  qualities  demanded  of  its  man- 
agers and  subordinate  officers  tend  to  become  more  and 
more  those  required  of  a  public  officer. 

In  the  earlier  formative  stages  of  capitalistic  industry, 
the  independence  and  individual  initiative  of  the  Anglo- 
Saxon  gave  him  a  great  advantage;  but  should  the  pre- 
sent-day tendencies  in  economic  development  prove  to  be 
permanent  and  the  syndicate  become  the  normal  eco- 
nomic unit,  then  this  capacity  of  the  German  for  "  team- 
work," this  power  to  efface  himself  in  the  interests  of  the 
group,  will  yield  many  advantages  to  German  industry. 

This  trait  of  being  ever  ready  to  organize  and  cooperate 
for  the  attainment  of  a  common  purpose  is  recognized  as 
one  of  the  advantages  which  the  German  enjoys  in  every 
department  of  life.  Too  much,  however,  has  undoubtedly 
been  made  of  this  in  explaining  the  commercial  success  of 
the  Germans,  especially  by  English  writers.  We  quote  the 
following  from  an  English  consular  report  which  seems  to 
represent  fairly  the  English  opinion  on  the  subject:  ^  — 
»  British  Blue  Book,  1899,  vol.  1,  p.  8. 


86       INDUSTRIAL   PROGRESS   OF   GERMANY 

"  Another  factor  that  is  considered  to  have  helped  the  devel- 
opment both  of  home  industries  and  foreign  trade  is  the  great 
extension  in  Germany  of  the  principle  of  association  or  cooper- 
ation amongst  the  commercial  classes  for  every  kind  of  mercan- 
tile enterprise.  .  .  .  This  system  is  often  a  marked  contrast  to 
the  characteristic  individual  efforts  of  the  Englishman  in  com- 
merce. .  .  .  An  instance  of  this  principle  is  found  in  the  re- 
markably well-organized  '  export-unions '  in  the  German  Empire. 
.  .  .  The  tendency  to  form  industrial  combinations  has  in  late 
years  had  a  great  influence  on  the  development  of  the  coun- 
try." 

Professor  von  Halle,  who  is  one  of  the  first  authorities 
on  the  foreign  commercial  relations  of  Germany,  says 
that  this  is  an  entire  misconception  as  far  as  foreign  trade 
is  concerned,  and  that  the  German  exporters  cooperated 
with  one  another  at  least  to  no  greater  extent  than  the 
British;  the  German  exporters  owe  their  success  to  indi- 
vidual enterprise. 

While  it  may  be  conceded  that  the  German  is  by  nature 
and  training  admirably  well  adapted  to  the  capitalistic 
method  of  business,  in  so  far  as  his  temperament  fits 
him  for  the  subordinate  positions  in  which  faithfulness, 
honesty,  and  patience  are  required,  yet  how  has  he  been 
able  to  develop  these  great  organized  industries  in  a  few 
short  years? 

Modern  industrial  management  has  two  sides,  the  tech- 
nical and  the  financial.  The  technical  side  of  industry 
rests  on  natural  science,  and  the  forerunners  of  our  cap- 
tains of  industry  were  the  natural  scientists  who,  with  no 
thought  of  utilitarian  application  of  the  results  of  their 
labors,  created  and  developed  the  sciences  of  physics  and 
chemistry.  After  these  came  men,  working  usually  alone, 
who  at  intervals  either  worked  out  or  stumbled  upon  a 
great  invention.  This  type  of  inventor,  often  without  a 
regular  scientific  education  and  working  on  his  own  initia- 
tive, usually  looked  upon  as  a  crank  by  his  neighbors,  was 
more  common  in  the  United  States  and  England  than  in 


INDUSTRIAL   CAPACITY   OF  THE    GERMAN    87 

Germany.  In  Germany,  on  the  other  hand,  the  relation 
between  practical  industry  and  science  has  been  much 
closer  and  more  systematic.  The  German  industries  very 
frequently  have  laboratories  with  corps  of  regularly  em- 
ployed scientists  in  connection  with  the  plant,  or  they  pay 
retaining  fees  to  professors  of  science  in  the  universities, 
who  are  regarded  as  technical  advisers,  and  who  are  under 
contract  to  give  to  their  clients  the  benefit  of  any  discov- 
eries they  may  make.  Laboratories  in  connection  with 
industrial  establishments  are  not  confined  to  Germany 
alone,  but  in  that  country  they  are  more  highly  developed 
than  anywhere  else,  and  that  is  the  way  by  which  the 
Germans  are  able  to  get  so  much  good  out  of  their  su- 
perior technical  education. 

In  America  and  England  the  advancement  of  technique 
is  less  systematic  and  more  haphazard;  the  character  of 
the  inventions  shows  this.  The  Yankee  excels  in  devising 
ingenious  mechanical  contrivances,  the  invention  of  which 
requires  a  clever  intelligence  rather  than  profound  sci- 
entific knowledge.  Frequently  very  important  inventions 
have  been  made  by  workingmen  who  have  little  or  no 
technical  training,  but  who  in  their  daily  work  have  seen 
the  need  of  improvements  and  have  been  able  to  work 
them  out. 

Most  of  the  progress  of  technique  in  Germany,  on  the 
other  hand,  has  come  as  the  result  of  patient  and  thorough 
scientific  investigation.  The  contributions  of  the  Ger- 
mans have  more  often  been  improvements  in  processes, 
for  instance,  in  the  making  of  steel,  in  the  manufacture  of 
chemical  products,  especially  dye-stuffs  and  pharmaceuti- 
cal preparations,  and  in  electro-technique.  Although  not 
unknown,  inventions  made  by  workingmen  as  the  result 
of  experience  gained  in  their  employment  are  not  frequent. 

The  work  of  the  modern  entrepreneur  is  to  organize 
materials  already  at  hand  into  an  harmonious  and  system- 
atic whole  and  administer  the  organization.   This  he  does 


88       INDUSTRIAL  PROGRESS   OF   GERMANY 

by  controlling  capital.  The  successful  and  clever  manage- 
ment of  capital  we  call  financial  skill.  There  exists  in 
Germany  a  race  of  people  not  Teutonic  who  possess  this 
quality  of  financial  skill  in  a  high  degree  —  the  Jews. 

The  part  which  these  people  play  in  commerce  and 
finance  is  in  Germany  as  large  or  larger  than  in  the  United 
States,  and  much  larger  than  in  England:  111  in  every 
10,000  of  the  population  of  Germany  are  adherents  to  the 
Jewish  faith,  about  the  same  proportion  as  in  the  United 
States,  while  in  England  there  are  only  20,  in  France  14, 
and  in  Sweden  7,  in  the  10,000  of  population.^  5205  Jews 
in  every  10,000  are  engaged  in  trade  and  commerce  (against 
450  Christians),  2119  in  manufacturing  (of  which  885  are 
in  the  clothing  manufacturing  and  cleaning  industry), 
and  106  in  10,000  are  in  agriculture  (against  3665  Chris- 
tians). While  the  proportion  of  the  Jews  in  the  total  popu- 
lation is  a  little  over  one  per  cent,  the  proportion  of  Jews 
engaged  in  mercantile  and  financial  pursuits  is  1 1  per  cent 
of  the  whole  number  of  persons  thus  engaged  (Troeltsch). 

Sombart  says  that  the  Jew  is  "the  commercial  leaven 
of  the  German  nation,"  and  gives  him  credit  for  much  of 
the  recent  industrial  and  commercial  expansion  of  the 
country;  but  this  opinion  does  not  go  unchallenged,  and 
it  is  pointed  out  that  among  the  great  German  captains 
of  industry  the  proportion  of  Jews  is  not  unduly  great,  — 
that  in  the  great  Rhine- Westphalian  industries,  such  as 
the  Krupps,  the  number  of  Jews  is  quite  small. 

Banking  has  always  been  the  commercial  branch  in 
which  the  Jew  excelled.  "  Promoting,"  taking  the  word 
in  its  largest  sense,  is  done  in  Germany  by  and  through 
the  banks,  a  large  part  of  whose  business  consists  in  mar- 
keting stocks.  In  this  way,  as  in  our  own  country,  the  Jew 
comes  to  play  an  important  role  in  industry,  especially 
since  high  finance  and  industry  have  become  so  intimately 

*  Werner  Sombart,  Die  DeutscJie  Volkswirtschaft  im  XIX.  Jahrhun- 
deri,  p.  134. 


INDUSTRIAL   CAPACITY   OF  THE    GERMAN    89 

associated.  Even  here,  however,  the  Jew  has  no  monopoly, 
for  among  the  great  names  in  the  Berlin  banking  circle 
there  are  many  Christians. 

Nevertheless,  from  the  figures  given  above  it  is  clear 
that  the  Jews  have  an  influence  on  trade  and  commerce 
quite  out  of  proportion  to  their  numbers.  An  evidence  of 
the  part  which  they  have  had  in  the  development  of  capital- 
ism is  furnished  by  the  anti-Semitic  feeling  which  is  cur- 
rent among  a  large  class  in  Germany.  On  examination 
this  feeling  may  be  found  to  exist  most  strongly  among 
those  classes  which  have  suffered  most  from  the  transition 
from  the  handicraft  to  the  factory  and  capitalistic  system 
of  production.  Having  no  understanding  of  the  real  source 
of  their  injuries,  capitalism,  they  vent  their  wrath  upon 
those  who  represent  the  system  —  the  Jews. 

There  are  other  racial  elements  besides  the  Jewish 
mingled  with  the  Teutonic  in  the  German  nation.  Very 
important  among  these  is  the  French,  which  came  in  es- 
pecially at  two  periods:  in  1706,  after  the  Revocation  of 
the  Edict  of  Nantes,  there  was  a  large  immigration  of  French 
Protestants,  and  in  1790  the  Revolution  drove  large  num- 
bers to  find  a  refuge  in  Germany,  many  of  whom  remained 
permanently. 

The  influence  which  the  mixing  of  races  has  had  on  the 
German  character  has  been  without  doubt  great  in  sharp- 
ening the  artistic  perception  and  skill,  and  in  adding  to  the 
slow,  calculating  temperament  of  the  Teuton  a  vivacious 
and  speculative  element.  A  union  of  these  two  qualities, 
the  calculating-cautious  and  the  speculative-imaginative, 
makes  the  most  successful  entrepreneur;  without  the 
former  he  will  be  unstable  and  imprudent,  and  without 
the  latter  quality  he  is  likely  to  be  unenterprising  and  to 
hesitate  in  taking  even  legitimate  risks. 

We  have  always  been  taught  to  believe  that  conserva- 
tism was  one  of  the  leading  traits  of  German  character. 
However  much  this  trait  may  have  survived  in  social  and 


90       INDUSTRIAL   PROGRESS   OF   GERMANY 

political  life,  it  seems  quite  clear  that  in  the  industrial 
and  business  world  a  great  change  has  taken  place  in 
this  respect.  Recent  English  writers  have  recognized  this, 
and  have  attributed  it  largely  to  the  technical  and  com- 
mercial education  which  the  German  receives.  Accord- 
ing to  their  view,  it  is  the  English  business  man  who  is 
afflicted  with  conservatism,  and  unless  he  speedily  learns 
to  adapt  himself  to  the  changing  demands  of  the  time,  the 
German  will  supplant  him  in  the  markets  of  the  world. 
The  reports  of  the  English  consuls  are  filled  with  similar 
warnings,  and  make  frequent  mention  of  cases  wherein 
the  German  has  won  to  himself  customers  and  ousted  the 
British  merchants  by  adapting  his  wares  or  his  methods 
to  the  habits  of  the  people  with  whom  he  dealt.  As  long 
as  there  was  no  rival  in  the  field,  the  Englishman  was 
able  to  sell  his  goods,  even  if  he  did  not  know  the  lan- 
guage of  the  country,  nor  make  any  attempt  to  modify 
his  wares  to  meet  the  peculiar  needs  of  his  customers.^ 

When  the  German  salesman  appeared,  however,  speak- 
ing the  language  of  the  country  and  offering  goods  which, 
even  if  the  quality  did  not  correspond  to  the  English 
standard,  looked  to  be  quite  as  good  and  were,  more- 
over, much  cheaper  in  price,  he  was  able  to  capture  the 
business  and  hold  the  customer. 

^  Many  instances  are  related  to  show  how  the  Germans  have  beaten 
the  English  merchants  by  adapting  their  wares  to  the  wants  and  preju- 
dices of  the  customers.  Some  of  them  have  already  become  classic. 

It  is  said  that  the  Brazilians  disliked  the  color  black  very  much,  even 
the  black  paper  in  which  the  English  needles  are  wrapped.  The  Germans 
were  clever  enough  to  see  this,  ofi'ered  needles  of  an  inferior  quality,  but 
put  up  in  bright  red  paper,  and  were  able  to  capture  the  entire  market. 

The  inhabitants  of  Trinidad  have  very  broad,  flat  feet,  but  the  English 
shoe  manufacturers  never  took  the  trouble  to  send  other  than  the  English 
shapes.  The  people  of  Trinidad  had  to  buy  the  ill-fitting  shoes  until  the 
Germans  came  with  some  which  suited  better,  and  of  course  they  won 
over  the  customers. 

Williams,  in  his  book  Made  in  Germany,  tells  us  that  formerly  the  red 
handkerchiefs  which  the  Russian  women  wore  on  their  heads  came  from 
Lancashire  mills.  They  were  oblong  in  shape,  whereas  the  women  pre- 
ferred square  ones.  A  German  perceived  this,  and  offered  square  red 
handkerchiefs,  which  instantly  caught  the  fancy  of  the  customers  and 
lost  to  England  this  particular  market. 


INDUSTRIAL   CAPACITY   OF  THE    GERMAN     91 

So  much  has  been  said  about  the  inferiority  of  German 
goods  that  people  are  Hkely  to  get  very  erroneous  ideas 
on  the  subject.  It  is  true  that  one  of  the  reasons  why  the 
German  merchants  could  offer  goods  at  cheaper  prices 
than  the  English  was  in  many  cases  the  inferior  quality 
due  to  cheaper  materials  or  less  labor  in  finishing  them  for 
the  market.  This  sacrifice  of  quality,  however,  was  made 
to  suit  the  demand  of  the  customer,  to  whom  often  the 
higher  standard  and  finer  finish  of  the  English  wares  did 
not  compensate  for  the  greater  cost.  There  is  no  doubt 
that  it  was  the  home  market  which  first  demanded  the 
cheap  goods  of  the  German  manufacturer,  for  the  poverty 
and  the  low  incomes  in  that  country  fifty  years  ago  neces- 
sitated the  strictest  economy  in  purchasing.  With  these 
same  goods  the  German  went  looking  for  foreign  markets, 
and  found  that  there  was  a  great  demand  ready  to  be 
created  when  the  cheaper  goods  should  be  offered.  The 
Englishman  had  simply  overlooked  this  opportunity,  and 
had  been  content  to  supply  the  limited  demand  for  high- 
priced  wares  of  the  highest  grade.  It  would  be  much  more 
correct  to  say  that  the  German  created  his  foreign  market 
rather  than  that  he  captured  it  from  his  competitors. 

But  the  fact  that  the  German  knows  how  to  supply 
goods  of  a  quality  suited  to  the  demand  of  the  market 
does  not  imply  that  he  cannot  also  manufacture  high- 
grade  wares.  The  British  Museum  has  its  best  printing 
done  in  the  Reichsdriickerei  in  Germany  because  it  can- 
not get  the  same  quality  of  work  done  in  England.  As  the 
country  becomes  wealthier,  the  German  customer  demands 
a  better  class  of  goods,  and  accordingly  the  manufacturers 
are  meeting  this  demand. 

As  one  writer  has  expressed  it,  the  English  manufac- 
turer and  merchant  have,  until  quite  recently,  been 
spoiled;  they  have  had  too  easy  a  time  of  it  in  the  past, 
and  their  long  unopposed  success  has  robbed  them  of  the 
energy  and    enterprise  with  which   they  attained    tlieir 


92       INDUSTRIAL   PROGRESS   OF   GERMANY 

preeminence.  They  have  so  long  been  conscious  of  the 
superiority  of  their  wares  and  methods  that  they  find  it 
difficult  to  realize  that  a  change  has  taken  place.  English 
industry  and  commerce  had  become  stereotyped,  and  had 
lost  the  power  to  adapt  itself  to  changed  conditions. 

The  German  manufacturer  and  merchant  has  been  able 
to  make  a  place  for  himself  and  to  continue  to  exist  only 
by  cleverly  adapting  his  business  to  the  needs  of  his  cus- 
tomers. Without  the  handicap  of  tradition  and  obsolete 
methods,  he  has  gone  at  it  in  his  systematic  and  thorough 
way  to  develop  his  industries  and  sell  his  goods;  he  has 
taken  pains  to  find  out  what  the  people  want  and  to  offer 
it  to  them;  he  has  learned  the  language  and  business 
customs  of  his  prospective  customers;  he  has  gone  abroad 
himself  or  sent  his  young  men  to  learn  the  methods  of  his 
rivals,  and  has  not  hesitated  to  adopt  them  when  he  has 
learned  them. 

The  German  merchant's  knowledge  of  foreign  languages 
not  only  enables  him  to  speak  in  the  language  of  the 
customer,  but  also  enables  him  to  read  the  trade  papers 
of  his  English  and  French  speaking  rivals. 

German  young  men  go  in  large  numbers  to  England 
to  learn  the  language  of  that  country.  Because  of  their 
knowledge  of  French  and  German,  they  can  easily  find 
employment  with  English  firms,  and  are  thus  enabled  to 
learn  a  great  deal  about  English  methods  and  customers. 
When  they  return  home  to  their  own  country,  or  go  abroad 
to  establish  themselves  as  merchants,  they  are  able  to  make 
good  use  of  this  knowledge  in  competition  with  the  Eng- 
lish. In  response  to  an  inquiry  sent  out  by  the  London 
Chamber  of  Commerce,  forty-five  per  cent  of  the  firms 
answering  admitted  that  they  employed  foreigners,  and 
gave  as  a  reason  therefor  that  the  English  applicants  did 
not  have  sufficient  acquaintance  with  foreign  languages, 
and  that  they  were  forced  to  take  on  foreigners,  especially 
Germans. 


INDUSTRIAL   CAPACITY   OF  THE    GERMAN     93 

One  of  the  greatest  differences  between  the  Enghsh  and 
the  German  character  is  the  tendency  of  the  former  to 
underestimate  anything  that  is  not  Enghsh,  and  the  tend- 
ency of  the  latter  to  overestimate,  or  at  least  properly  to 
appreciate,  anything  that  is  foreign.  The  German  is  his 
own  severest  critic. 

Our  consul-general  in  Berlin,  Mr.  Frank  Mason,  who 
has  observed  German  conditions  for  many  years,  writes 
on  this  point  in  a  recent  report :  ^  — 

"As  Germany  has  been  clever  and  enterprising  in  adopting 
and  making  the  best  use  of  improved  methods  and  machinery 
from  abroad,  so  the  nations  which,  like  our  own,  must  meet 
this  competition  in  the  world's  markets,  will  find  it  needful  to 
imitate  her  methods  in  much  that  relates  to  thoroughness  in 
specialized  education,  in  the  art  of  adapting  and  selling  goods 
to  alien  peoples,  and  to  high  service  in  everything  that  pertains 
to  the  development  and  maintenance  of  foreign  trade," 

Also  from  the  same  report:  — 

"An  eminent  English  technician  who  recently  visited  the 
United  States  was  impressed  with  the  lack  of  scientific  knowledge 
on  the  part  of  the  foremen  and  high-class  operatives,  and  the 
indifference  on  the  part  of  their  employers  to  the  latest  and 
highest  perfections  in  machinery.  The  latter  part  of  their  criti- 
cism is  confirmed  by  various  Americans  who  are  engaged  in 
supplying  the  new  labor-saving  machines  in  Great  Britain  and 
Germany,  and  who  find  that  progressive  foreign  firms  in  the 
metal  industries  are  more  enterprising  than  their  American 
rivals  in  adopting  up-to-date  labor-saving  equipments  of  Ameri- 
can origin.  Germany  and  Great  Britain  afford  especially  good 
markets  for  American  machinery  of  the  best  types." 

*  United  States  Consular  Reports,  No.  2168,  January  27, 1905. 


CHAPTER  VI 

INDUSTRIAL  EDUCATION 

One  of  the  great  differences  between  Germany  and  the 
United  States  in  the  life  of  the  people  is  expressed  by  the 
German  word  Stand.  The  word  means  trade,  business, 
profession,  or  more  broadly,  social  class.  Every  German 
has  his  Stand  very  definitely  fixed.  In  that  country,  one  is 
always  required  to  give  one's  Stand  along  with  his  name 
and  address  as  a  part  of  the  information  by  which  he  is  to 
be  identified.  An  American  is  likely  to  resent  this  as  an 
impertinent  and  unwarranted  meddling  with  his  private 
affairs,  when,  in  filling  out  a  blank  application  for  a  book 
at  a  public  library,  or  when  registering  at  a  hotel,  he  must 
write  down  his  "  business." 

Indeed,  some  Americans  would  find  it  difficult  to  say 
in  a  word  just  what  their  Stand  was;  not  so  with  the  Ger- 
man. While  yet  a  youth  his  Stand  is  definitely  chosen, 
and  only  in  rare  cases  does  he  change  it  throughout  his 
whole  career.  A  life  so  varied  as  that  of  President  Roose- 
velt —  university  student,  author,  legislator,  police  com- 
missioner, ranchman,  soldier,  president  —  is  most  extraor- 
dinary to  the  German  mind  on  account  of  its  variety.  It 
is  the  opportunity  which  one  has  in  America  to  change  his 
occupation,  to  move  about  until  he  finds  the  thing  that 
suits  him,  and  to  adapt  his  business  to  changing  circum- 
stances, that  is  likely  to  be  in  the  mind  of  the  German 
when  he  speaks  of  America  as  a  "free"  country.  It  is  so- 
cial and  economic  rather  than  political  freedom  that  con- 
stitutes the  greatest  difference  between  the  two  countries 
in  this  respect. 

One  of  the  main  reasons  for  this  immobility  in  German 


INDUSTRIAL   EDUCATION  95 

life  is  the  idea  that  a  man  must  be  especially  trained  and 
educated  for  his  career,  no  matter  how  humble  that  may 
be.  After  a  man  has  spent  several  years  and  much  money 
in  acquiring  a  training  in  a  certain  line,  it  is  not  difficult 
to  understand  how  tremendously  hard  it  is  for  him  to 
abandon  his  occupation  and  begin  a  new  course  of  training 
in  another.  To  "pick  up"  a  trade  or  business  or  to  "get 
there  "  by  short  cuts  is  unknown.  There  is  for  almost  every 
position  in  life  a  prescribed  course  of  education,  which  must 
be  passed  through  by  both  the  stupid  and  the  clever. 
Hence  the  German  thoroughness  of  which  we  hear  so 
much.    This  is  the  price  at  which  it  is  bought. 

A  question  immediately  arises:  suppose  the  person  is 
totally  unfit  in  temperament  and  talent  for  the  Stand 
which  he  or  his  parents  have  chosen  for  him  ?  What  hap- 
pens to  the  square  pegs  who  have  been  thrust  into  round 
holes  ?  Unfortunately,  these  square  pegs  stick  to  the  round 
holes  as  long  as  they  can. 

The  writer  once  participated  in  a  discussion  about  the 
"intellectual  proletariat."  The  Germans  maintained  that 
this  class,  so  numerous  and  pitiable  in  their  country,  were 
as  much  entitled  to  charitable  relief  suited  to  their  needs 
from  the  government  as  was  the  ordinary  pauper.  The 
Americans  of  the  party  could  see  no  reason  for  making 
any  distinction;  if  the  physician  or  lawyer  had  failed  to 
succeed  in  their  professions,  why  should  they  not  find  work 
more  suited  to  their  capacities,  even  manual  labor,  rather 
than  become  paupers  ?  Of  course,  if  they  were  unable  to 
earn  a  living  at  any  sort  of  labor,  they  would  then  sink 
naturally  into  the  pauper  class,  but  in  that  case  they  would 
be  cared  for  as  ordinary  paupers.  This  idea  was  impos- 
sible to  the  Germans,  who  could  not  conceive  of  a  physi- 
cian doing  anything  for  a  livelihood  but  practicing  his  pro- 
fession, or  a  lawyer  anything  but  pleading  before  a  court. 
If  they  failed  as  physician  or  lawyer,  they  failed  in  life. 
Therefore  the  necessity  for  aid  to  this  special  class  of  intel- 


96       INDUSTRIAL   PROGRESS   OF   GERMANY 

lectual  paupers,  whom  in  America  we  would  advise  to  try 
farming  before  they  asked  alms. 

The  idea  that  every  man  must  have  his  Stand,  and  that 
he  must  be  particularly  trained  for  his  career  in  life,  has 
created  a  demand  for  education  in  Germany  which  exists 
in  scarcely  any  other  land.  Things  which  in  America 
we  expect  every  person  to  know,  or  to  be  able  to  acquire 
simply  through  the  exercise  of  common  sense,  are  there 
made  a  course  of  study.  There  is  little  prejudice  there  on 
the  part  of  the  practical  and  successful  men  of  affairs 
against  systematic  and  theoretical  school  training. 

Other  nations  are  acquiring  great  respect  for  the  Ger- 
many variety  of  practical  education,  and  the  English 
writers  and  consular  ofl&cers  especially  are  urging  the 
establishment  of  technical  and  commercial  schools  of  the 
German  pattern  to  enable  England  to  meet  the  new  com- 
petition in  the  markets  of  the  world.  There  is  a  demand 
for  reform  in  the  English  educational  system  on  the  plan 
of  the  German  Real  and  Oberreal  schools,  which  substi- 
tute modern  subjects,  especially  French  and  English,  for 
Latin  and  Greek,  and  yet  maintain  the  same  rank  as  the 
classical  schools.^ 

In  studying  the  educational  methods  and  systems  of 
Germany,  therefore,  we  are  dealing  with  one  of  the  most 
fundamental  causes  of  her  recent  industrial  progress. 
There  is  no  doubt  that  it  is  his  splendid  industrial  training 
which  has  enabled  the  German  to  overcome  many  obstacles 
in  reaching  his  present  industrial  position,  and  to  cope  with 

»  United  States  consul,  Mr.  Harris,  puts  the  case  as  follows:  — 
"The  reason  that  commercial  education  has  received  but  little  attention 
in  England  till  now  is  because  the  people  have  a  highly  developed  instinct 
for  trade.  Then  again,  the  geographical  position  of  the  country,  together 
with  a  combination  of  circumstances,  has  greatly  assisted  England  to 
become  the  first  commercial  nation  of  the  world.  In  Germany,  France, 
Austria,  and  other  nations  of  Europe  the  unfavorable  geographical  posi- 
tion and  adverse  circumstances  have  awakened  the  people  to  a  realization 
of  the  fact  that  it  is  only  a  superior  educational  training  that  will  put  the 
merchants  in  a  position  to  compete  with  those  of  England." 
United  States  Consular  Report,  January,  1904. 


INDUSTRIAL   EDUCATION  97 

the  difficulties  which  other  peoples  have  not  had  to  meet; 
i.  e.  "widespread  poverty,  poor  soil,  and  conservatism  on 
the  part  of  the  people." 

Our  eflacient  consul-general  in  Berlin,  Mr.  Frank  H. 
Mason,  in  a  recent  consular  report,  writes :  ^  — 

"Similarly  in  the  iron  and  steel  manufacture  and  in  the  long, 
varied  schedule  of  textile  production,  it  is  only  the  possession  of 
a  vast  army  of  skilled  chemists,  metallurgists,  designers,  dyers, 
weavers,  and  spinners,  recruited  year  by  year  from  graduates 
of  the  universities  and  technical  and  industrial  art  schools  and 
backed  by  salesmen  and  merchants  elaborately  educated  and 
trained  for  commercial  work  in  foreign  countries,  that  has  ena- 
bled Germany  to  practically  monopolize  certain  special  forms 
of  manufacturing,  and,  despite  limited  natural  resources,  to 
conquer  and  maintain  a  place  in  the  front  rank  of  industrial 
nations." 

The  beginning  of  Germany's  educational  system  dates 
from  the  same  period  which  saw  the  introduction  of  so 
many  reforms,  the  period  of  prostration  under  the  power 
of  Napoleon.  King  Friedrich  Wilhelm  said  after  the 
defeat  of  Jena :  — 

"The  State  must  regain  by  intellectual  power  what  she  has 
lost  in  material  power,  and  to  this  end  I  desire  that  everything 
may  be  done  to  extend  and  perfect  the  education  of  the  people." 

It  is  not  only  that  a  person  must  be  educated  for  the 
branch  of  industry  which  he  intends  to  enter,  as,  for 
instance,  mining,  the  manufacture  of  machinery,  or  the 
retailing  of  dry  goods,  but  he  must  be  particularly  trained 
for  the  place  he  intends  to  occupy  in  the  business,  whether 
manager,  foreman,  or  skilled  workman.  Naturally,  the 
future  manager  must  acquaint  himself  with  all  parts  of 
the  business,  and  to  do  this  he  may  perhaps  do  the  work 
of  the  ordinary  employee  for  a  time,  but  while  doing  so 
he  would  never  think  of  classing  himself  with  the  men 
with  whom  he  is  working.     This  is  quite  a  different  way 

1  United  States  Cmsvlar  Reports,  No.  2068,  September  29,  1904. 


98       INDUSTRIAL  PROGRESS   OF   GERMANY 

of  "beginning  at  the  bottom"  than  prevails  in  America. 
Here  men  enter  a  business  in  a  subordinate  position  with 
the  hope  of  learning  it  in  the  course  of  their  daily  duties, 
and  they  expect  to  be  promoted  according  to  the  clever- 
ness and  ability  with  which  they  learn  the  business.  In 
Germany  a  man  could  not  hope  to  rise  to  the  higher 
administrative  positions  unless  he  received  special  train- 
ing therefor,  in  most  cases  training  in  a  school  outside 
the  business  itself.  Of  course  there  are  cases  in  Germany 
where  men  have  worked  up  from  the  bottom,  but  they  are 
much  more  uncommon  than  with  us. 

Consequently  we  have  in  Germany  a  special  class  of 
schools  for  each  grade  of  worker:  the  higher  schools  for 
those  who  are  to  become  entrepreneurs  and  managers,  a 
middle  school  for  those  who  are  to  be  technical  assistants 
and  foremen,  and  finally,  schools  simply  for  the  skilled 
workmen.  This  classification  prevails  both  in  the  indus- 
trial and  in  the  commercial  schools. 

Before  discussing  the  industrial  and  commercial  school 
system,  it  will  perhaps  be  well  to  preface  a  few  words 
concerning  general  education.  The  common-school  course 
occupies  the  pupil  from  the  sixth  to  the  fourteenth  year 
normally.  In  nearly  all  the  states  the  government  makes  at 
least  this  much  education  compulsory.  In  many  places 
fees  (Schul-Groschen)  are  still  required,  but  the  amount 
is  small. 

The  common  school  does  not  prepare  the  pupil  for 
entrance  to  a  higher  institution,  except,  of  course,  the  con- 
tinuation schools.  At  the  end  of  the  fourth  year  the  parents 
must  decide  a  question  of  vast  importance  to  the  future  of 
the  child :  whether  it  is  to  continue  in  the  common  school 
and  finish  its  education  there,  or  whether  it  shall  enter 
upon  a  course  leading  to  higher  education,  at  least  to  the 
attainment  of  the  one-year-service  certificate.  If  it  con- 
tinues in  the  common  school,  the  only  chance  for  more 
education  after  completing  the  course  lies  in  the  continua- 


INDUSTRIAL   EDUCATION  99 

tion  school,  which  simply  supplements  the  common-school 
training  without  promoting  the  pupil  in  scholarship. 

If  the  decision  is  for  higher  education,  the  child  leaves 
the  common  school  and  enters  a  secondary  school  or 
gymnasium.  Here  again  a  choice  must  be  made  between 
the  classical  and  the  modem  Real  schools;  if  the  pupil 
intends  to  prepare  for  a  university,  he  must  decide  whether 
it  shall  be  a  classical,  literary,  or  a  technical  university. 
The  old  classical  gjinnasiums  offer  a  thorough  training  in 
Greek  and  Latin,  which  until  recently  was  necessary  for 
entrance  to  any  of  the  university  faculties,  now  only  for  the 
theological  faculty. 

In  the  Real  gymnasiums  Greek  is  not  required,  but 
a  distinction  is  made  between  those  which  require  Latin 
and  those  which  substitute  modem  languages  entirely  for 
the  classical.  The  former  are  called  Real-Gymnasien  and 
the  latter  Realschulen  and  Oherrealschulen.  The  Real 
and  Oberreal  schools  are  intended  for  those  who  expect 
to  enter  the  higher  industrial  and  commercial  schools 
after  graduation,  or  who  wish  a  more  practical  training  for 
active  business  than  the  classical  gymnasiums  offer. 

The  secondary  schools  of  all  sorts  offer  two  courses:  a 
six-year  course,  at  the  end  of  which  the  pupil  may  take  an 
examination  for  the  one-year-army-service  certificate,  and 
a  nine-year  course,  the  graduates  of  which  are  qualified  to 
enter  institutions  of  university  grade.  Roughly  estimated, 
the  pupil  who  has  completed  the  nine-year  course  is  about 
as  far  advanced  in  scholarship  as  the  sophomore  in  our 
average  American  college  at  the  end  of  his  year. 

We  have  already  mentioned  the  importance  attached 
to  the  possession  of  the  one-year-army-service  certificate. 
Although  it  does  not  qualify  its  holder  to  enter  the  univer- 
sities, it  places  him  in  the  class  of  "  educated  "  people,  and  is 
thus  of  great  social  and  practical  advantage  to  him.  The 
privileges  which  it  confers  doubtless  induce  many  young 
Germans  to  attain  a  higher  standard  of  education  than 


100      INDUSTRIAL   PROGRESS   OF   GERMANY 

they  otherwise  would,  since  it  often  costs  a  severe  struggle 
which  only  a  very  great  incentive  could  call  forth.  Besides 
the  fact  that  the  certificate  allows  the  young  man  to  serve 
one  year  in  the  army  instead  of  two,  and  under  much  more 
pleasant  circumstances,  it  also  offers  the  chance  of  becom- 
ing a  lieutenant  of  the  reserves,  which  means  that  in  case 
of  war  he  may  go  as  an  officer  instead  of  as  a  private. 

The  Fortbildungs  or  continuation  schools  are  very 
numerous  in  Germany.  They  are  intended  to  provide 
instruction  for  the  common  people  who  are  compelled  to 
limit  their  schooling  to  the  common  schools,  and  who  have 
neither  the  time  nor  the  means  to  attend  the  regular 
schools.  Since  most  of  the  pupils  are  employed  in  active 
business  during  the  day,  the  hours  of  instruction  must  of 
necessity  be  limited  to  evenings,  Sundays,  and  holidays. 
The  general  continuation  schools  simply  supplement  the 
instruction  of  the  common  schools,  but  there  are  also 
continuation  schools  in  which  practical  instruction  in  the 
industrial  trades  and  in  commercial  subjects  is  given. 
Most  of  the  states  have  laws  compelling  attendance  at 
either  general  or  industrial  continuation  schools,  and  these 
laws  are  becoming  more  stringent  all  the  time.  Some  of 
them  make  it  obligatory  on  the  part  of  the  employers  to 
see  that  their  apprentices  are  receiving  this  instruction, 
and  in  some  cases  they  even  require  the  employer  to  allow 
a  certain  period  each  day  during  the  usual  business  hours 
to  be  used  by  the  apprentices  for  attending  these  schools; 
this  time  is  set  by  the  school  officers. 

Most  of  the  continuation  schools  are  supported  by  the 
local  communities,  but  a  great  number  of  them  receive  all 
or  part  of  their  maintenance  from  private  associations 
having  an  interest  in  the  education  of  the  working  people, 
usually  associations  of  employers. 

The  Prussian  industrial  continuation  schools  in  1901 
involved  an  expenditure  of  over  four  and  a  half  million 
marks,  defrayed  as  follows:  — 


INDUSTRIAL   EDUCATION  101 

From  tuition  fees,  23% 
From  the  State,  28% 

From  the  local  school  funds  and  the  contributions  of  private 
associations,  49% 

The  difficulty  of  providing  teachers  for  these  industrial 
continuation  schools  is  a  serious  one,  since  the  hours  for 
instruction  are  so  short  that  the  time  of  the  teachers  is  but 
partially  employed ;  consequently  this  teaching  is  a  supple- 
mentary occupation  either  of  teachers  who  are  regularly 
employed  in  the  public  schools  during  the  day,  and  who 
must  provide  themselves  with  the  necessary  technical 
training,  or  men  who  are  actively  engaged  in  the  industry 
taught,  and  who  happen  to  possess  the  required  peda- 
gogical ability  and  knowledge  for  the  place.  Training 
courses  for  teachers  are  given  in  some  of  the  higher  tech- 
nical institutions. 

All  the  industrial  and  commercial  continuation  schools 
have  the  duty,  in  common  with  the  general  continuation 
schools,  of  supplementing  the  instruction  received  in  the 
common  schools,  especially  in  those  branches  most  closely 
related  to  the  industry  or  trade.  German,  arithmetic,  and 
drawing  are  taught  in  all  the  industrial  schools.  The 
instruction  in  German  includes,  as  far  as  possible,  reading 
and  composition  in  such  subjects  as  technology,  business 
methods,  German  law  (especially  the  constitution  and 
statutes  relating  to  the  relations  of  employer  and  employee), 
and  elementary  economics.  In  arithmetic  special  attention 
is  given  to  such  calculations  as  are  most  used  in  indus- 
try and  business,  especially  in  bookkeeping.  In  drawing, 
after  the  elementary  principles  are  learned,  the  nature  of 
the  instruction  given  differs  with  the  different  industries. 
The  important  point  is  to  make  the  pupil  familiar  with 
plans  and  drawings  and  to  give  him  the  ability  to  work 
from  a  plan.  In  all  industrial  education,  from  the  lowest 
to  the  highest,  great  stress  is  laid  upon  drawing. 

In  the  curricula  of  the  continuation  schools  of  the  larger 


Schools 

Pupils 

1882 

623 

57,084 

1903 

1169 

176,738 

102      INDUSTRIAL   PROGRESS    OF   GERMANY 

cities,  especially  Berlin,  appear  also  geometry,  trigono- 
metry, algebra,  physics,  chemistry,  French,  English,  his- 
tory, stenography,  and  typewriting. 

The  growth  of  the  continuation  school  in  Prussia  may  be 
seen  from  the  following  table:  ^  — 

Compulsory 
Schools  Pupils 

335  32,558 

997  137,678 

One  of  the  reasons  for  this  rapid  increase  is  the  general 
introduction  of  laws  of  compulsory  attendance  which  the 
Prussian  state  required  of  the  local  governments  as  a  con- 
dition in  the  granting  of  funds. 

The  commercial  continuation  schools  combine  more 
easily  with  the  general  continuation  schools.  The  subjects 
especially  provided  for  apprentices  of  commercial  con- 
cerns are  correspondence,  commercial  arithmetic,  theory 
and  history  of  trade  and  exchange,  commercial  geography, 
bookkeeping,  stenography,  typewriting,  and  commercial 
law.  Particular  care  is  of  course  given  to  French  and 
English.  In  1903  there  were  253  commercial  continuation 
schools  with  25,927  pupils  in  Prussia. 

The  elementary  industrial  schools  have  for  their  object 
the  training  of  subordinate  ofRcers  and  foremen  of  the  large 
industries  or  the  managers  of  very  small  enterprises.  The 
requirements  for  entrance  are  usually  the  completion  of  the 
common-school  course  (often  in  addition,  special  require- 
ments in  mathematics  and  drawing),  and  several  years' 
practical  experience  in  the  trade  or  industry,  at  least  the 
completion  of  the  apprenticeship. 

The  nature  of  the  instruction  in  the  elementary  indus- 
trial schools  varies  widely  according  to  the  industry,  but 
in  all  mathematics,  the  natural  sciences,  and  drawing  are 
most  carefully  taught.  In  some  cases  more  emphasis  is  laid 

»  Lexis,  Das  Unterrichtswesen  im  Devisches  Reichs,  Band  iv.  Tell  3, 
p.  74. 


INDUSTRIAL   EDUCATION  103 

on  the  practical  side  and  in  others  more  on  the  theoretical 
side  of  the  subject.  In  many  of  the  schools  the  student  gets 
practical  experience  by  working  at  the  trade  or  in  the 
industry  during  a  part  of  the  year  and  studying  in  the 
school  the  remainder. 

The  intermediate  industrial  schools  provide  instruction 
for  the  higher  officers  in  large  industries  and  proprietors 
of  medium-sized  enterprises.  The  preliminary  education 
demanded  for  entrance  is  at  least  the  certificate  for  one- 
year  service  in  the  army.  Some  of  the  schools  demand 
also  a  certain  term  of  active  experience  in  the  industry, 
others  which  have  workshops  and  laboratories  waive  this 
requirement.  The  progress  of  the  student  is  strictly  super- 
vised, and  he  cannot  pass  to  a  higher  without  having  sat- 
isfactorily completed  the  work  of  a  lower  grade.  The 
course  is  from  two  to  three  years  long,  and  on  gradua- 
tion the  student  is  usually  qualified  to  enter  a  technical 
university. 

The  technical  Hochschulen  (all  institutions  of  university 
rank  in  Germany  are  termed  Hochschulen)  prepare  men 
for  the  highest  positions  in  the  industrial  world,  and  train 
men  for  careers  of  scientific  research  either  as  professors 
or  as  laboratory  scientists  in  the  great  industries.  These 
are  the  institutions  which  have  enabled  Germany  to  take 
a  place  in  the  front  rank  of  industrial  nations. 

All  the  technical  Hochschulen,  with  the  exception  of 
that  of  Aix-la-Chapelle,  date  back  at  least  seventy  years. 
With  the  establishment  of  the  Realschulen,  which  assumed 
the  task  of  preparing  the  students  for  the  higher  work 
in  technology,  the  Hochschulen  were  enabled  to  confine 
themselves  to  work  of  a  university  grade,  and  to  take  rank 
with  the  old  classical  universities.  The  fees  average  from 
70  marks  to  80  marks  per  year,  exclusive  of  laboratory 
fees. 

In  1903  they  were  attended  by  14,626  students,  2242  of 
whom  were  foreigners.   Although  303  Americans  attended 


104     INDUSTRIAL  PROGRESS   OF   GERMANY 

the  classical  universities  in  1902,  only  58  attended  the 
technical  Hochschulen. 

The  following  is  a  list  of  the  technical  Hochschulen  of 
Germany  in  1903  with  the  number  of  teachers  and  stu- 
dents in  attendance :  — 


Teachers 

Students 

Berlin  (Charlottenburg) 

402 

4194 

Munich 

115 

2804 

Darmstadt 

108 

1700 

Karlsruhe 

126 

1685 

Hanover 

94 

1523 

Dresden 

87 

1082 

Stuttgart 

95 

861 

Aix-la-Chapelle 

66 

665 

Brunswick 

52 

472 

1145  14,986 

It  is  the  policy  of  the  German  government  to  control  as 
far  as  possible  the  educational  system  of  the  country.  This 
aim  has  been  but  partially  realized  in  the  field  of  industrial 
and  commercial  education,  and  there  are  still  many  pri- 
vate institutions  conducted  for  profit,  and  many  of  the 
public  institutions  receive  contributions  from  corporations 
and  associations  who  profit  by  the  work  they  are  doing. 
Of  all  the  German  industrial  and  technical  schools,  536 
are  public  and  51  are  private. 

While  the  teachers  in  the  industrial  schools  consider 
teaching  as  their  main  occupation  as  a  rule,  yet  many  of 
them  are  employed  in  actual  business.  In  one  way  this  is 
desirable,  since  the  instruction  is  thus  kept  in  close  touch 
with  practical  business,  and  the  institution  is  able  to  secure 
better  men  by  allowing  them  to  supplement  their  small 
salaries  from  outside  sources.  In  some  cases  the  require- 
ments as  to  scholarship  are  not  insisted  upon  when  the 
candidate  has  special  technical  knowledge  and  ability. 
There  are  no  normal  schools  in  Germany  for  the  training 
of  teachers  for  industrial  schools. 

The  following  is  a  list  of  the  industrial  schools  of  Ger- 
many above  the  rank  of  continuation  schools.   In  the  first 


INDUSTRIAL   EDUCATION  105 

column  is  given  the  number  of  institutions  in  which  the 
trade  or  industry  in  question  is  the  principal  subject 
taught ;  in  the  second  column  is  given  the  number  of  insti- 
tutions in  which  the  industry  forms  but  one  department :  * 

SCHOOLS    OF    UNIVERSITY    RANK   (Hochichukn) 


Technical  universities 

9 

Mining  academies  (of  university  rank) 

3 

INTERMEDIATE   SCHOOLS 

Institutions  with  several  departments 

Pubhc 

10 

Private 

2 

Institutions  with  one  department  predominating 

Mechanics 

Public 

12 

10 

Private 

3 

2 

Textile 

,  public 
ELEMENTARY   SCHOOLS 

13 

Schools  for  architecture  and  construction 

Pubhc 

63 

9 

Private 

8 

6 

Schools  for  mechanics 

Public 

13 

12 

Private 

13 

4 

Mining 

58 

Metallurgy 

10 

Textiles 

104 

Wood  carving 

2i 

5 

Ceramics 

6 

2 

Industrial  art 

27 

Trade  schools 

27 

Farriers'  schools 

61 

Navigation  and  marine  mechanics 

40 

1 

Fresh-water  navigation 

52 

Ship  building 

4 

Other  industrial  schools 

42 

9 

Commercial  Education 

Commercial  education  has  developed  in  Germany 
much  later  than  industrial  education,  and  the  system  is 
still  comparatively  incomplete.  There  is  a  great  lack  of 
intermediate  commercial   schools,   and   the  Hochschulen 

*  Lexis,  Das  Unterrichtswesen  im  Devtschen  Reich,  Band  iv,  Teil  3, 
p.  30. 


106     INDUSTRIAL   PROGRESS   OF   GERMANY 

have  lowered  their  own  standards  to  accomplish  the  work 
which  properly  belongs  to  the  schools  below.  Of  the  ele- 
mentary commercial  schools  there  are  a  great  number 
which  attempt  to  impart  a  general  education  along  with  the 
strictly  commercial  branches.  Many  of  these  are  private 
enterprises  and  have  a  very  low  efficiency. 

The  commercial  school  does  not  meet  with  the  same 
general  approval  in  Germany  as  the  industrial  school. 
There  is  a  large  class  of  business  men,  as  with  us  in  Amer- 
ica, who  think  that  it  is  better  for  a  young  man,  after 
having  finished  his  general  education,  to  enter  at  once  into 
active  business.  The  activity  of  the  Chambers  of  Com- 
merce and  other  associations  of  business  men,  however, 
in  providing  instruction  and  in  contributing  to  the  support 
of  the  commercial  schools  shows  clearly  that  the  majority 
are  in  favor  of  commercial  education. 

Only  in  rare  cases  has  the  state  founded  commercial 
schools;  they  have  been  established  more  often  by  the 
local  communities,  at  the  suggestion  and  with  the  support 
of  the  merchants'  associations.  Often  they  are  private 
undertakings. 

The  commercial  Hochschulen  are  established  to  train 
men  in  commercial  science,  especially  such  as  are  to  man- 
age the  affairs  of  the  large  mercantile  firms,  or  who  expect 
to  become  administrative  officers  of  chambers  of  commerce, 
or  consuls,  or  teachers  in  the  commercial  schools. 

There  are  at  present  five  commercial  Hochschulen  in 
Germany:  Leipzig,  founded  in  1898;  Frankfurt  a.  M., 
founded  in  1898  ;  Aix-la-Chapelle,  founded  in  1898;  Co- 
logne, founded  in  1901 ;   Berlin,  founded  in  1905. 

They  were  established  to  meet  the  need  which  was  felt 
for  a  course  of  training  especially  adapted  for  those  who  ex- 
pected to  follow  mercantile  careers  and  wanted  the  social 
prestige  of  an  education  of  university  rank.  At  Leipzig, 
the  commercial  Hochschule  is  run  in  close  connection 
with  the  university,  the  students  attend  the  university  lee- 


INDUSTRIAL   EDUCATION  107 

tures,  and  the  university  professors  lecture  at  the  Hoch- 
schule.  The  commercial  Hochschule  at  Frankfurt  has 
close  relations  with  the  Real  gymnasium  of  that  city.  In 
Aix-la-Chapelle,  the  commercial  Hochschvle  is  a  depart- 
ment of  the  Technical  Institute.  It  is  only  at  Cologne 
that  the  commercial  Hochschule  is  entirely  independent. 

The  commercial  Hochschule  at  Leipzig  reported  519 
students  during  the  year  1902-03,  of  whom  306  were 
Germans  and  213  foreigners;  of  the  latter  110  alone  were 
Russians,  and  none  of  them  were  Americans. 

There  are  four  classes  of  students  admitted:  (1)  gradu- 
ates of  the  nine-year  course  of  the  gymnasiums,  (2)  gradu- 
ates of  the  intermediate  commercial  schools,  (3)  German 
teachers  who  have  passed  their  state  examination,  and  (4) 
those  who  have  completed  the  six-year  course  of  the  gym- 
nasium (holders  of  the  one-year-service  certificate)  and 
also  their  business  apprenticeship. 

The  provision  for  the  admission  of  the  last  class  is  most 
wise;  the  business  apprenticeship  is  held  to  be  a  substitute 
for  the  extra  three  years  of  gymnasium  work,  and  thus 
the  university  standard  is  maintained.  Moreover,  the 
contact  with  actual  business  life  which  the  apprenticeship 
affords,  fits  the  student  to  appreciate  more  thoroughly,  and 
to  conceive  in  a  much  more  practical  manner,  the  courses 
of  the  Hochschule.  This  plan  meets  the  objection  of  those 
who  contend  that  a  three-year  course  following  consecu- 
tively upon  the  nine-year  gymnasium  course  unfits  the 
young  man  for  practical  business,  and  does  not  allow  him 
to  begin  his  apprenticeship  until  he  has  passed  the  proper 
age. 

The  courses  given  in  the  commercial  Hochschule  at 
Leipzig  are:  modern  languages,  commercial  arithmetic, 
bookkeeping,  general  commercial  technology,  stenography, 
typewriting. 

The  courses  given  in  the  university  and  credited  at  the 
commercial  Hochschule  are:    elements  of  political  eco- 


108      INDUSTRIAL  PROGRESS   OF   GERMANY 

nomy,  elements  of  political  science,  finance,  statistics, 
money  and  banking,  exchange,  sociology  in  its  practical 
aspects,  international,  administrative,  and  commercial 
law,  three  courses  in  commercial  geography,  applied 
chemistry,  and  five  courses  in  pedagogy  for  teachers. 

A  typical  commercial  school  of  the  intermediate  grade 
is  the  Handelslehranstalt  at  Leipzig.  It  is  maintained  by 
the  Chamber  of  Commerce,  and  offers  courses  for  active 
apprentices  of  the  local  business  houses  as  well  as  for  stu- 
dents who  can  give  their  whole  time  to  the  work. 
A  schedule  of  the  courses  offered  is  as  follows:  — 
One-year  course  for  apprentices  who  have  attained  the 
one-year-army-service  certificate :  — 

Hours 
per  week 
English  correspondence  2 

French  correspondence  2 

Commercial  arithmetic  2 

Exchange  and  the  laws  of  exchange  1 

Bookkeeping  2 

Theory  of  commerce  ^  1 

Stenography  '  2 

Three-year  course  for  apprentices  who  have  had  a 
common-school  education  and  who  are  apprenticed  to 
some  local  mercantile  house :  — 


First 

Second 

Third 

year 

year 

year 

German 

1 

1 

1  hours 

English 
French 

2 

2 
2 

2    per 
2  week 

Commercial  arithmetic 

4 

8 

2 

Theory  of  commerce 
Bookkeeping  and  office  work 
Business  correspondence 
Commercial  geography 
Penmanship 
Stenography 

1 

2 
2 

1 

1 

1 

1 

1 
2 
1 

1 

Three-year  course  for  students  who  are  not  otherwise 
employed,  and  who  have  had  a  common-school  education 
and  in  addition  special  instruction  in  German,  French, 
geography,  history,  and  arithmetic :  — 


INDUSTRIAL   EDUCATION 


109 


First     Second      Third 


year 

year 

year 

German 

4 

3 

3  /iOMrs 

English  language  and  correspondence 
French  language  and  correspondence 
Mathematics 

5 
5 
3 

4 
4 
3 

5  per 
5  week 
4 

Commercial  arithmetic 

6 

3 

2 

Physics 

Commercial  technology 

Chemistry 

Study  of  materials 

General  and  commercial  geography 

2 

2 

2 
2 

2 

2 
2 
1 

2 

General  and  commercial  history 

2 

2 

2 

Commerce  and  exchange 

2 

1 

Bookkeeping  and  ofBce-work 

3 

3 

Economics 

2 

Penmanship                                                   2 
Stenography                                                   2 
Gymnastics                                                     2 
Optional:  Spanish,  Italian,  and  Russian 

2 

1 
2 

1 

2 

One-year  course  for  students  who  have  attained  the 
one-year-army-service  certificate,  and  who  intend  enter- 
ing the  offices  of  wholesale  houses,  large  manufacturers, 
or  bankers:  — 


Hours 

Prescribed 

per  week 

English  language  and  correspondence 

5 

French  language  and  correspondence 

5 

Commercial  arithmetic 

4 

Commercial  law  and  the  law  of  exchange 

2 

Bookkeeping 

4 

German  correspondence 

2 

Economics 

S 

History  of  commerce  and  geography  of  commerce 

3 

Study  of  materials 

3 

Penmanship 

1 

Elective 

German  for  foreigners 

2 

Spanish 

2 

Italian 

« 

Russian 

3 

Stenography 

2 

CHAPTER   VII 

THE  GERMAN  WORKINGMAN 

The  ultimate  aim  in  studying  the  economic  conditions  of 
a  country  is  not  to  establish  the  amount  of  imports  and 
exports,  or  the  quantities  of  iron  or  textiles  produced; 
these  are  only  means  to  an  end.  The  real  object  of  all  such 
inquiries  is  directly  or  indirectly  to  ascertain  the  degree 
of  prosperity  enjoyed  by  the  people,  and  the  causes  there- 
for, so  that  other  countries  may  learn  to  make  use  of  the 
same  means  if  they  have  brought  prosperity,  or  to  avoid 
them  if  they  have  proved  obstructive. 

We  have  established  the  fact  that  Germany  has  made  a 
great  industrial  advance;  that  the  amount  of  goods  pro- 
duced and  consumed  has  enormously  increased;  that  her 
foreign  trade  has  grown  at  a  greater  rate  than  that  of  other 
European  countries.  But  that  knowledge  requires  to  be 
supplemented.  We  want  to  know  the  effect  these  changes 
have  had  on  the  welfare  of  the  people.  Industrial  progress 
is  not  always  synonymous  with  economic  prosperity. 
The  darkest  chapter  in  the  economic  history  of  England 
covers  the  period  during  the  first  half  of  the  nineteenth 
century,  which  we  know  as  the  period  of  the  Industrial 
Revolution,  when  the  wealth  of  that  nation  was  increasing 
by  leaps  and  bounds,  and  the  great  mass  of  the  people 
were  living  in  the  most  appalling  degradation  on  the 
scantiest  incomes. 

The  rate  of  wages  and  the  amount  of  incomes  tell  us 
much  about  the  economic  condition  of  a  people,  but  with 
them  we  must  also  have  some  information  as  to  the  prices 
of  the  common  articles  of  life  and  the  cost  of  living.  Yet 
even  with  these  facts  before  us,  we  cannot  draw  absolute 


THE    GERMAN   WORKINGMAN  111 

conclusions.  The  same  money  income,  possessing  the 
same  purchasing  power,  will  secure  for  one  person  a  com- 
fortable existence,  while  to  his  neighbor  it  will  mean  pov- 
erty. Between  the  people  of  different  nations  this  ability 
to  utilize  goods  and  income  varies  greatly,  especially  be- 
tween a  wasteful  people  like  the  average  American  and  a 
frugal  one  like  the  French. 

Furthermore,  many  of  the  conditions  by  which  we  are 
surrounded  are  quite  independent  of  goods  which  we  may 
purchase  with  an  income.  Municipal  ordinances,  clean 
and  well-lighted  streets,  public  parks,  schools,  museums, 
etc.,  are  just  as  real  advantages  to  those  who  possess  them 
as  the  goods  which  they  purchase  with  money. 

The  rate  of  wages  has  also  another  interest  for  the  stu- 
dent of  economic  conditions,  inasmuch  as  wages  are  one 
of  the  most  important  constituents  of  the  cost  of  produc- 
tion. For  this  purpose,  however,  it  is  necessary  to  take  the 
point  of  view  of  the  employer  and  regard  wages  as  outlay 
for  labor  force,  or  cost  of  labor.  The  employer  is  not  so 
much  concerned  as  to  the  amount  he  pays  to  the  individual 
workman  as  he  is  about  the  total  sum  he  must  pay  for  a 
given  quantity  of  work  performed.  So  the  question  turns 
about  the  amount  and  quality  of  the  performance  of  the 
workman.  Therefore  high  wages  may  not  indicate  a  high 
cost  of  labor,  nor  low  wages  a  low  cost  of  labor.  If  we  find 
a  difference  in  the  customary  rate  of  wages  paid  in  two 
countries,  we  are  not  justified  in  concluding  that  one  of 
the  countries  produces  goods  at  a  less  cost  than  the  other, 
and  is  consequently  better  able  to  compete  in  the  markets 
of  the  world. 

Professor  W.  J.  Ashley  has  just  published  a  little  book  ^ 
on  German  wages,  as  a  contribution  to  the  tariff  contro- 
versy now  being  agitated  in  England  under  the  leadership 

*  The  Progress  of  the  German  Working  Classes  during  the  Last  Quarter 
of  a  Century.  London :  Longmans,  Green  &  Co.  The  book  appeared  in 
December,  1904. 


112     INDUSTRIAL   PROGRESS   OF   GERMANY 

of  Mr.  Joseph  Chamberlain.  The  free-trade  party  has 
referred  to  Germany  as  a  protectionist  country  in  which 
the  condition  of  the  workingman  is  bad.  Professor  Ashley 
frankly  admits  that  his  researches  are  made  for  the  pur- 
pose of  refuting  these  statements ;  but  since  he  has  relied 
upon  fact  and  statistics  to  maintain  his  thesis,  we  may 
accept  without  hesitation  the  results  reached  by  this  trust- 
worthy authority. 

Most  of  the  following  tables  have  been  collected  or  com- 
piled by  Professor  Ashley  from  various  sources.  We  repro- 
duce them  here,  with  some  others,  to  show  the  general 
upward  tendency  of  wages  during  the  recent  past. 

The  first  table  is  compiled  from  the  Imperial  Insurance 
Statistics,  and  covers  the  wages  of  all  men,  women,  and 
children  engaged  in  building,  mining,  metallurgy,  textile, 
and  chemical  industries.  These  returns  have  been  col- 
lected for  the  purpose  of  reckoning  the  compensation  to 
be  given  for  accidents.  According  to  law,  the  excess  of 
wages  above  1200  marks  per  annum  is  to  be  reckoned  at 
one  third  the  actual  amount.  That  is,  if  a  person  is  in 
receipt  of  1500  marks,  300  marks  is  to  be  returned  in  these 
statistics  as  100  marks,  and  the  total  annual  wage  at  1300 
marks  instead  of  the  real  amount.  The  effect  of  this,  of 
course,  is  to  underestimate  the  increase  of  wages  whenever 
they  are  above  the  1200  mark  limit.  It  is  to  be  assumed 
that  if  the  wages  under  1200  marks  have  increased,  those 
above  that  figure  have  likewise  increased ;  so  that  the  fault 
of  the  table  is  that  it  shows  a  much  smaller  rise  of  wages 
than  actually  occurred. 

GERMAN  WAGES,   1886-1900,  AS  RETURNED    BY   THE   INSUR- 
ANCE   AUTHORITIES 
(Percentage  of  wages  in  1900) 

1886  81.4                            1894  85.9 

1887  78.7                            1895  84.9 

1888  79.3                            1896  88.6 

1889  80.8                            1897  90.9 


THE   GERMAN   WORKINGMAN  113 


1890 

84.4 

1898 

94.4 

1891 

84.8 

1899 

96.8 

1892 

84.3 

1900 

100.0 

1893 

84.8 

The  important  industry  of  ship-building  employed 
50,451  men  in  1889-1900,  of  whom  15,341  were  ship- 
builders, 9906  machinists,  6696  helpers,  and  2816  boiler- 
makers.  These  classes  comprise  64  per  cent  of  all  the 
employees  of  the  industry,  and  the  statistics  of  their  wages 
will  afford  a  clear  view  of  the  general  condition  of  wages 
in  this  industry. 

WAGES   PER   HOUR   AT   A   HAMBURG   SHIPYARD* 


1880 

1890 

1899 

Ship-builders 

28-35  pf. 

32-45  pf. 

34-48  pf. 

Machinists 

30-33 

35-42 

39-43 

Helpers 

26-28 

31-34 

33-34 

This  general  improvement  in  earnings  took  place  in 
spite  of  the  fact  that  a  reduction  of  the  hours  of  labor,  an 
introduction  of  the  eight-hour  day,  took  place  in  the  middle 
of  the  eighties. 

The  movement  of  wages  in  coal  mining  is  exhibited 
by  the  following  figures,  compiled  by  the  labor  depart- 
ment from  official  Prussian  sources,  and  published  in  the 
Abstract  of  Foreign  Labor  Statistics  (1901),  p.  30:  — 

AVERAGE  ANNUAL    EARNINGS    OF    ADULT    COAL    MINERS 
IN   PRUSSIA 


Hewers  and  Trammers 

Surface  Worhnen 

1888 

Ml 

3  s. 

2d. 

^34 

2  s. 

8d. 

1889 

45 

9 

6 

36 

10 

2 

1890 

52 

6 

9 

40 

7 

0 

1891 

53 

17 

1 

40 

18 

11 

1892 

50 

1 

9 

39 

11 

8 

1893 

48 

0 

2 

38 

14 

10 

1894 

48 

13 

4 

38 

17 

2 

1895 

49 

6 

2 

39 

5 

9 

1896 

52 

8 

11 

40 

11 

11 

1897 

66 

14 

5 

42 

8 

8 

1898 

63 

9 

1 

46 

2 

8 

*  Schwarz  und  von  Halle,  Die  Sehifjbauindtistrie  (1902),  pp.  105-111, 
124. 


114     INDUSTRIAL   PROGRESS   OF   GERMANY 

The  rise  of  wages  in  the  textile  industry  has  not  been 
so  marked,  but  improvements  in  conditions  not  appear- 
ing in  statistics  have  taken  place;  for  instance,  the  disap- 
pearance of  hand-loom  weavers  and  domestic  workshops. 
The  proportion  of  women  and  children  employed  has 
also  increased,  and  their  lower  wages  naturally  tend  to 
bring  down  the  average.  The  increase  in  the  percentage 
of  women  employees  has  grown  from  38  in  1882  to  45  in 
1895  of  the  whole  number  of  persons  employed.  The  in- 
dustry employed  in  1895  about  three  quarters  of  a  million 
people.  The  following  statistics  deal  with  about  117,000 
out  of  the  whole  number  of  employees :  — 

AVERAGE  ANNUAL  EARNINGS  OF  THE  OPERATIVES  EM- 
PLOYED BY  THE  TEXTILE  ASSOCIATIONS  IN  SILESIA  AND 
ALSACE  ^ 

1885 
1886 
1887 
1888 
1889 
1890 
1891 
1892 
1893 
1894 
1895 
1896 
1897 
1898 
1899 
1900 

That  the  general  upward  tendency  of  wages  has  affected 
all  classes  of  labor,  from  the  skilled  to  the  unskilled,  is 
shown  by  the  table  giving  the  wages  of  day  laborers  in  the 
large  cities.  These  figures  are  compiled  by  local  authorities 
under  provision  of  the  sick-insurance  laws,  and  represent 

*  Sybel,  Storung  im  Deutschen  Wirtschaftsleben,  i,  pp.  145-148.  Pub- 
lished in  the  Vereine  fur  Social-Politik,  vol.  cv,  1903. 


In  Silesia 

Jn  Alsace 

401  marks 

401 

600  marks 

410 

592 

415 

601 

425 

606 

435 

618 

438 

617 

439 

608 

444 

624 

446 

630 

453 

645 

461 

649 

471 

655 

483 

663 

494 

670 

506 

THE   GERMAN  WORKINGMAN  115 

"the  rates  of  daily  pay  customary  in  the  locality."  The 
increase,  on  the  average,  has  been  about  25  per  cent  from 
1884  to  1904. 

CUSTOMARY    LOCAL   WAGES    OF   D\Y  LABORERS   IN  THE 
CITIES,  1884-1904 


To^lms 

Population 

1884 

1900 

1904 

Aachen 

135,000 

2.0  m. 

2.4  m. 

2.4  m. 

Altona 

161,000 

2.5 

3.0 

3.0 

Barmen 

141,000 

2.4 

2.4 

2.7 

Berlin 

1,888,000 

2.4 

2.7 

2.9 

Bremen 

163,000 

3.0 

3.5 

Breslau 

422,000 

1.6 

2.0 

2.4 

Brunswick 

128,000 

2.2 

2.5 

Charlottenburg 

189,000 

2.0 

2.5 

2.9 

Chemnitz 

206,000 

2.0 

2.2 

2.5 

Cologne 

372,000 

2.5 

2.5 

3.0 

Crefeld 

106,000 

2.4 

2.6 

Danzig 

140,000 

1.8 

2.0 

2.5 

Dortmund 

142,000 

2.0 

2.5 

2.75 

Dresden 

396,000 

2.5 

2.8 

Diisseldorf 

213,000 

2.4 

2.4 

3.0 

Elberfeld 

156,000 

2.4 

2.7 

Essen 

118,000 

2.4 

2.4 

2.8 

Frankfurt  a.  M. 

288,000 

2.5 

3.1 

Halle 

156,000 

2.1 

2.2 

2.45 

Hamburg 

705,000 

3.0 

3.0 

Hanover 

235,000 

1.8 

2.4 

2.7 

Kassel 

106,000 

2.1 

2.16 

2.5 

Kiel 

107,000 

2.7 

2.7 

3.2 

Konigsberg 

189,000 

1.7 

2.0 

2.3 

Leipzig 

456.000 

2.0 

3.0 

Magdeburg 

229,000 

2.0 

2.0 

2.5 

Mannheim 

141,000 

2.3 

2.7 

2.7 

Munich 

499,000 

2.3 

2.5 

3.0 

Nuremberg 

261,000 

2.2 

2.9 

Posen 

117,000 

1.6 

1.6 

2.0 

Stettin 

210,000 

2.0 

2.25 

2.5 

Strassburg 

151,000 

2.2 

2.5 

2.5 

Stuttgart 

176,000 

2.0 

2.7 

3.0 

The  next  table  is  compiled  from  the  pay-roll  of  an 
engineering  establishment,  and  shows  not  only  a  rise  in 
wages,  but  also  a  greater  steadiness  of  employment. 


116     INDUSTRIAL   PROGRESS   OF   GERMANY 

THE  ANNUAL,  EARNINGS  OF  WORK  PEOPLE  EMPLOYED 
MORE  THAN  TWO  HUNDRED  DAYS  PER  YEAR  IN  A  MAGh- 
DEBURG    ENGINEERING    ESTABLISHMENT  ^ 

Amount  of  Actual  Earnings    Number  of  employees  receiving 
{in  marks)  the  varicyus  amounts 

1887  1892  1897 

100-  200 

200-  300 

300-  400 

400-  500 

500-  600 

600-  700 

700-  800 

800-  900 

900-1000 
1000-1100 
1100-1200 
1200-1300 
1300-1400 
1400-1500 
1500-1600 
1600-1700 
1700-1800 
1800-1900 
1900-2000 
2000-2600 
Total  number  employed  200 

days  or  more 
Total  number  employed 
Percentage 

The  largest  private  industrial  concern  in  Germany  is  the 
well-known  Krupp  Iron  Works  at  Essen,  which  employs 
about  24,000  people.  The  average  daily  wages  of  all  the 
employees  from  1871  to  1900  is  shown  by  the  following 
table :  — 

AVERAGE  WAGES  PER  DAY  IN  THE  KRUPP  WORKS,  1871-1900  ^ 


1 

1 

0 

8 

17 

16 

8 

12 

6 

2 

19 

3 

2 

15 

5 

4 

14 

4 

11 

12 

6 

21 

36 

22 

51 

61 

33 

53 

107 

65 

67 

83 

91 

68 

119 

113 

38 

87 

161 

22 

55 

146 

6 

37 

127 

7 

19 

74 

9 

12 

74 

3 

3 

40 

23 

_ 



31 

381 

709 

1041 

545 

884 

1296 

69.9 

80.2 

80.3 

1871 

3.03  marks 

100% 

1875 

3.89 

128 

1880 

3.19 

105 

1885 

3.64 

120 

1890 

3.95 

130 

•  Beck,  Lohn-  und  Arbeits  Verkdltnisse  in  der  deutschen  Maschinenin- 
dustrie  (1902),  p.  40. 

^  Statistics  of  the  Essen  Consum-Anstalt,  prepared  for  the  Diisseldorf 
Exposition,  p.  24. 


THE   GERMAN   WORKINGMAN  117 


1891 

4.05  marks 

133% 

1892 

4.06 

134 

1893 

4.09 

135 

1894 

4.06 

134 

1895 

4.10 

139 

1896 

4.24 

139 

1897 

4.48 

147 

1898 

4.57 

150 

1899 

4.72 

155 

1900 

4.74 

157 

In  the  chemical  industry  the  average  wages  have 
increased  considerably  during  the  last  few  years.  The 
annual  average  wage  per  workman  in  this  industry  for  the 
last  six  years  is  as  follows :  ^  — 


1894 

885.04  marks 

1895 

894.16 

1896 

906.04 

1897 

922.03 

1898 

948.31 

1899 

965.71 

According  to  the  income-tax  returns,  the  average  income 
of  the  German  citizen  has  increased  as  follows :  ^ 


1840 

241  marks 

1870 

372 

1895 

506 

1900 

650 

The  foregoing  statistics  establish  beyond  question  the 
fact  that  the  money  wages  of  the  German  workman  have 
risen  considerably  in  all  industries.  At  the  same  time  there 
has  been  a  marked  reduction  in  the  number  of  hours  of 
work  per  day.  That  this  advance  in  money  wages  has  not 
been  entirely  counterbalanced  by  a  rise  in  the  cost  of  living, 
and  that  the  improvement  has  been  a  real  one  for  the 
workingman,  is  demonstrated  by  the  following  table  of 
prices  of  food  in  the  Essen  market,  which  is  given  in 
connection  with  the  wage-table  for  the  employees  of  the 
Krupp  works :  — 

^  Handhuch  der  Wirtschxiftskunde  Deutschlands,  vol.  iii,  p.  495. 
^  Sombart,  Die  Deutsche  Volkswirtschaft  im  XIX.  Jahrhundert,  p, 
459. 


118     INDUSTRIAL   PROGRESS   OF   GERMANY 


PRICE 

OF  FOOD   AT 

ESSEN, 

1871- 

1900  * 

Bacon 

per 

Beef, 

2d, 

Veal, 

2d, 

Potatoes 

Rye 

KUc 

> 

per  Kilo 

per  Kilo 

100  Kilos 

Bread 

Price 

% 

Price 

% 

Price 

% 

Price 

Price 

1871 

1.40  m. 

100 

8.00  m. 

0.16  m. 

1875 

1.49 

106 

1.10  m. 

100 

1.15  m 

.    100 

5.60 

.15 

1880 

1.53 

109 

1.16 

105 

1.20 

104 

7.94 

.18 

1885 

1.44 

102 

1.20 

109 

1.20 

104 

6.11 

.14 

1890 

1.71 

121 

1.26 

115 

1.22 

106 

5.98 

.14 

1891 

1.50 

106 

1.30 

118 

1.25 

109 

8.47 

.17 

1892 

1.55 

110 

1.30 

118 

1.20 

104 

7.47 

.18 

1893 

1.51 

107 

1.21 

110 

1.13 

98 

4.86 

.13 

1894 

1.50 

106 

1.24 

113 

1.17 

102 

5.27 

.12 

1895 

1.41 

100 

1.30 

118 

1.27 

110 

6.93 

.12 

1896 

1.36 

96 

1.23 

112 

1.21 

105 

6.30 

.13 

1897 

1.51 

107 

1.20 

109 

1.25 

108 

6.04 

.14 

1898 

1.63 

116 

1.20 

109 

1.33 

115 

6.27 

.14 

1899 

1.47 

104 

1.20 

109 

1.40 

121 

5.87 

.14 

1900 

1.44 

102 

1.22 

111 

1.40 

121 

5.oQ 

.13 

The  statistics  which  we  have  reproduced  in  this  chapter 
prove  conclusively  that  the  rate  of  wages  has  risen  during 
the  recent  past,  and  has  risen  more  than  the  price  of  the 
necessities  of  life,  showing  that  the  German  workingman 
has  shared  in  the  prosperity  of  the  country.  Another  indi- 
cation of  the  improvement  of  the  labor  conditions,  espe- 
cially of  the  lowest  class  of  labor,  is  the  great  falling  off  of 
emigration  during  the  last  decade.  There  is  at  present  a 
greater  immigration  into  Germany  than  emigration  from  it. 

We  have  refrained  from  going  into  the  question  of  the 
comparative  wages  of  England,  the  United  States,  and 
Germany.  Professor  von  Halle  of  Berlin,  who  has  inti- 
mate personal  knowledge  of  the  labor  conditions  of  the 
United  States  and  England,  as  well  as  of  those  of  his  own 
country,  says  that  wage  statistics  for  the  purpose  of  com- 
paring the  condition  of  the  workingmen  of  one  country 
with  another  are  Schwindel.  Even  if  it  were  possible  to 
calculate  a  sort  of  "real  wage"  by  mingling  together  wage 
statistics  with  those  of  the  cost  of  living,  we  should  still 
lack  a  suitable  basis  for  conclusions  as  to  the  compara- 
'  Exhibit  of  the  Consum-Ansialt,  p.  24. 


THE   GERMAN   WORKINGMAN  119 

tive  prosperity  of  the  workingmen  of  the  several  countries. 
There  are  too  many  elements  besides  wages  and  prices  to 
be  considered  in  comparing  the  condition  of  one  people 
with  that  of  another,  and  it  would  seem  to  be  much  more 
reasonable  to  draw  conclusions  from  actual  observation  of 
conditions  as  they  exist. 

Nor  does  a  comparison  of  wages  prove  of  much  value 
in  determining  the  cost  of  labor  as  one  of  the  factors  in  the 
cost  of  production.  The  capacity  of  the  workmen  varies  so 
much  that  the  laborer  most  highly  paid  is  often  the  cheap- 
est to  his  employer.  In  this  connection  it  must  also  be 
remembered  that  high  wages  may  sometimes  be  unfavora- 
ble even  to  the  workingman,  when  they  are  procured  at 
the  expense  of  health.  The  man  employed  on  piece-work, 
straining  every  nerve  and  muscle  all  the  day  long,  and 
snatching  a  bite  of  luncheon  at  noon  without  quitting  his 
bench,  may  establish  a  record  for  efficiency  which  is  the 
boast  of  the  shop,  and  may  receive  a  wage  that  is  above  the 
usual  pay  of  his  class;  but  what  does  it  profit  him,  if  by  so 
doing  he  has  squandered  his  health  and  energy  recklessly, 
and  breaks  down  long  before  he  has  reached  old  age? 
Moreover,  it  is  perhaps  more  than  likely  that  he  has  been 
spending  every  cent  of  his  high  income  as  fast  as  it  came. 
Leaving  his  work  every  night  in  a  state  of  exhaustion,  his 
weakened  nerves  are  not  able  to  withstand  the  temptation 
to  drink,  and  his  ample  income  permits  the  indulgence. 

The  slower-moving  German,  taking  his  hour  and  a  half 
or  two  hours  for  Mittagsessen,  with  two  Pauses  besides, 
may  not  get  half  as  much  pay,  but  at  the  same  time  he 
may  get  twice  as  much  satisfaction  out  of  life.  Professor 
Schulze-Gaevernitz  *  says  that  the  hours  of  labor  in  the 
textile  industries  were  two  more  than  in  England,  but 
that  the  machinery  ran  10  per  cent  slower  and  only  80 
per  cent  of  the  working  time,  while  in  England  it  ran  from 
92  to  95  per  cent  of  the  time. 

^  Der  Grossbetrieb,  1893. 


120     INDUSTRIAL   PROGRESS   OF   GERMANY 

There  is  a  surprise  in  store  for  every  American  who 
visits  Germany  expecting  to  see  want  and  misery  on  every 
hand.  He  will  search  in  vain  in  the  large  cities  for  districts 
which  he  can  compare  to  the  East  Side  of  New  York  or 
the  Hull  House  district  of  Chicago,  at  least  so  far  as 
external  appearances  go.  There  is  in  Berlin  nothing  which 
is  at  all  like  an  American  slum.  At  first  he  will  be  inclined 
to  attribute  this  condition  to  the  superior  municipal  govern- 
ment which  makes  Berlin  the  cleanest  and  best-regulated 
city  in  the  world.  He  will  still  believe  that  the  essential 
conditions  of  the  slum  must  exist  somewhere,  although 
concealed  from  the  public  view  behind  the  white  walls 
of  the  monotonous  rows  of  flat  buildings  which,  in  the 
poorest  quarters  of  the  city,  look  very  little  different  from 
those  of  the  fashionable  Charlottenburg  streets. 

He  will  look  for  signs  of  degradation  and  misery  in  the 
people  on  the  streets  and  the  children  running  about.  Of 
course  he  will  see  evidences  of  poverty,  but  it  is  a  respect- 
able, dreary  dead-level  of  poverty,  which  is  something 
quite  different  from  the  picturesque  loathsomeness  to  be 
seen  in  our  slums.  He  will  fail  to  find  that  ragged,  filthy, 
drunken  depravity  which  marks  so  many  English  cities, 
as,  for  example,  Liverpool  and  Manchester.  At  first  he 
may  be  tempted  to  attribute  the  difference  to  the  German 
government,  and  imagine  that  the  extreme  poverty  is  pre- 
vented by  large  distributions  of  poor-relief.  Authorities 
will  tell  him,  however,  that  there  is  much  less  expended  in 
purely  charitable  enterprises  in  Germany  than  in  England, 
and  that  the  German  pauper  class  is  small  compared  with 
that  in  England.  Professor  Schmoller  *  says  that  the  bur- 
den of  public  poor-relief  is  twice  as  great  in  Great  Britain 
as  in  Germany. 

On  the  other  hand,  there  are  probably  fewer  of  the 
working  class  who  are  really  well-to-do  in  Germany  than 

*  Schmoller,  Grundriss  der  cdlgemeinen  Volkswirtschaftslehre,  vol.  ii, 
p.  325. 


THE   GERMAN   WORKINGMAN  121 

in  England  or,  of  course,  than  in  the  United  States.  Com- 
petent observers  have  frequently  remarked  this  lack  of 
extremes  in  Germany.  In  the  report  of  the  delegation 
sent  by  the  British  Iron  Trade  Association  to  investigate 
German  industrial  conditions,  we  find  it  stated  on  this 
point :  — 

"So  far  as  Germany  is  concerned,  the  greatest  difference, 
compared  with  our  own  country,  consists  in  the  amounts  re- 
ceived by  many  of  the  head  'mill-contractors,'  whose  counter- 
parts practically  do  not  exist  in  Germany,  the  engineer  there 
taking  the  full  control,  oversight,  and  responsibility  of  his  de- 
partment. Apart  from  these  men,  there  is  not  the  difference  in 
wages  paid  as  between  Germany  and  this  country  that  is  com- 
monly supposed  to  exist,  taking  into  consideration  the  whole 
of  the  manufacturing  departments  in  the  iron  and  steel  works. 
In  other  words,  the  general  distribution  of  wages  is  more  evenly 
balanced,  and  we  do  not  find  the  extremes  that  obtain  amongst 
English  workmen  "  (1896). 

Herr  von  Berlepsch,  former  Prussian  minister  of  com- 
merce, sums  up  his  opinions  on  the  condition  of  the 
working  classes  in  the  following  quotation  from  a  recent 
speech : — 

"  First  let  me  say  that  T  am  well  aware  that  the  condition 
of  industrial  wage-earners  has,  on  the  whole,  become  better  in 
the  course  of  recent  decades,  and  that  with  some  industries  and 
classes  of  workmen  the  improvement  has  been  quite  consid- 
erable —  although  altogether  apart  from  the  blessings,  which 
can  hardly  be  overestimated,  of  the  insurance  against  sickness, 
accident,  old  age,  and  infirmity.  Absolute,  permanent  poverty 
has  considerably  diminished ;  indeed,  it  has  practically  retreated 
to  certain  branches  of  'home'  work.  .  .  .  The  fact  needs  no 
long  argument;  even  the  leaders  of  the  Social  Democracy  now 
recognize  that  the  theory  of  the  progressive  impoverishment  of 
the  masses  can  no  longer  be  maintained.  Slowly  and  by  little 
steps  rises  the  well-being  of  the  general  body  of  the  people; 
and  no  small  number  of  those  classes  of  the  population  which 
thirty  years  ago  obtained  a  bare  subsistence  have  now  made  their 
way  into  a  middle  class  and  enjoy  a  fairly  adequate  income." 


122      INDUSTRIAL   PROGRESS   OF   GERMANY 

How  shall  we  account  for  this  absence  of  extreme 
poverty  among  the  working  class  in  Germany?  A  dif- 
ference certainly  exists  between  the  German  and  the 
Anglo-Saxon  in  respect  to  education  and  training.  The 
German  thinks  that  every  person  must  be  educated  for 
his  calling  in  life,  no  matter  how  humble  that  may  be; 
and  the  opportunity  is  provided,  indeed  in  most  of  the 
cities  it  is  compulsory,  for  every  man  to  receive  instruc- 
tion in  his  trade.  The  continuation  schools  {Forthildungs- 
schulen)  provide  instruction  evenings  and  Sundays  for 
those  who  are  employed  during  the  day.  The  educational 
system  of  Germany  goes  far  to  eliminate  that  class  of 
helpless  incapables  which  is  the  despair  of  the  charitable 
societies  of  England  and  America. 

Another  cause  of  the  favorable  condition  of  Germany 
as  regards  poverty  is  the  greater  sobriety  of  the  proletariat, 
notwithstanding  the  fact  that  statistics  show  the  consump- 
tion of  alcoholic  drinks  to  be  much  larger  in  Germany 
than  in  England. 

CONSUMPTION  OF   ALCOHOLIC    DRINKS   PER   CAPITA  * 


(Gallons  consumed  annually) 

Wines              Beer 

Spirits 

England 

0.41                 31.9 

1.03 

Germany 

0.77                 27.1 

1.85 

This  is  not  due,  however,  to  the  larger  consumption  of 
the  working  classes,  but  to  that  of  the  higher  classes. 
While  in  recent  years  there  has  not  been  wanting  temper- 
ance agitation  in  Germany,  it  has  made  much  less  headway 
than  in  England  and  America,  and  teetotalers  are  rare. 
In  Germany  there  is  much  less  drinking  of  spirits  among 
the  working  classes,  and  the  large  consumption  indicated 
by  the  statistics  arises  no  doubt  from  the  almost  univer- 
sal habit  among  the  higher  classes  of  drinking  liqueurs. 
Moreover,  the  German  beer  is  a  much  milder  beverage 
than  the  English  ale.  Drinks  of  all  kinds  are  much  cheaper 
»  Board  of  Trade  Statistics,  1898. 


THE   GERMAN   WORKINGMAN  123 

in  Germany  than  in  England,  and  the  German  working- 
man  spends  far  less  of  his  income  in  this  direction  than 
the  Englishman  or  the  American.  Drunkenness  among 
women,  which  is  so  common  in  England,  is  as  rare  in 
Germany  as  in  America. 

If  the  German  workingman  spends  comparatively  little 
money  on  drink,  he  spends  still  less  on  gambling.  There 
are  no  horse-races  and  pool-rooms  for  public  betting,  and 
few,  if  any,  gambling-rooms  of  any  kind.  It  is  true  that 
the  state  maintains  a  lottery,  from  which  it  derives  a  con- 
siderable revenue,  but  it  is  so  arranged,  especially  in  Prus- 
sia, as  to  be  as  little  attractive  as  possible  to  the  poorer 
classes.  Moreover,  this  form  of  gambling  is  much  less 
harmful  than  other  forms.  There  is  little  excitement  about 
it,  and  men  are  not  likely  to  be  tempted  to  risk  more  than 
they  can  afford  —  the  worst  feature  of  ordinary  gambling. 
The  buying  of  a  lottery  ticket  is  more  like  an  investment, 
and  no  doubt  often  conduces  to  frugality. 

We  have  observed  in  Germany  a  great  lack  of  oppor- 
tunity for  the  workman  to  rise  and  to  better  his  condition 
in  life.  When  the  German  youth  has  once  chosen  his  Stand, 
he  can  almost  forecast  his  whole  career;  he  knows  almost 
what  his  income  will  be  for  every  year  of  his  life,  unless 
something  quite  unusual  occurs.  This  settled  condition 
of  things  is  felt  by  every  American  who  becomes  acquainted 
with  Germany  as  hopelessly  depressing;  life  without  the 
hope  of  changes  of  fortune,  even  when  accompanied  by 
the  inevitable  risks  of  defeat,  seems  to  him  hardly  worth 
the  living,  especially  if  he  possesses  the  characteristically 
American  restless,  energetic  temperament.  As  he  himself 
would  express  it,  the  American  wants  "a  run  for  his 
money." 

There  is,  however,  a  bright  side  to  this  picture.  The 
German  accepts  these  settled  conditions  and  knows  no 
other.  His  philosophy  of  life  teaches  him  that  contentment 


124      INDUSTRIAL  PROGRESS   OF   GERMANY 

is  the  secret  of  happiness,  and  all  his  efforts  are  directed 
toward  making  the  best  of  what  he  has,  since  there  is  little 
hope  of  gaining  more.  Unlike  the  American,  he  has  not 
always  before  him  examples  of  fortunes  won  by  men  of  his 
own  class  who,  discontented  with  their  lot,  have  taken  the 
risk  of  new  enterprises.  The  German  of  the  lower  class 
lacks  enterprise  because  he  has  no  opportunity  to  use  it; 
he  is  wise  enough  to  see  that  for  him  frugality  and  con- 
tentment are  better. 

The  introduction  of  insurance  laws  protecting  the 
workingman  against  sickness  and  accidents,  and  promising 
him  a  pension  in  his  old  age,  has  had  the  tendency  to  make 
the  laborer  more  contented.  It  does  not  matter  very  much 
that  the  relief  and  pension  are  very  small,  and  that  the 
workingman  has  paid  for  most  of  it  himself  out  of  his 
wages;  the  real  point  is  that  they  decrease  the  chances  of 
misfortune  in  life.  How  shall  we  estimate  the  psychological 
effect  of  this  protection  in  increasing  the  happiness  of  the 
population  ?  Who  can  say  how  much  it  is  worth  to  be  rid 
of  anxiety  about  sustenance  in  the  future.'*  It  would  be 
manifestly  absurd  to  try  to  calculate  this  effect  from  the 
amount  of  money  received  by  the  beneficiaries,  or  to  bal- 
ance it  against  the  higher  wages  of  the  English  or  American 
workman. 

There  is  one  conspicuous  instance  in  which  the  German 
government  affords  less  protection  to  the  workingman  than 
the  English  or  the  American.  In  the  latter  country  the  law 
gives  the  workman  the  first  lien  on  the  work  which  he  has 
done.  Powerful  capitalistic  interests  have  prevented  the 
passage  of  a  similar  law  by  German  legislatures.  In  many 
cases  in  the  large  cities,  speculative  building  companies  have 
undertaken  construction  on  borrowed  capital,  and  have 
later  declared  bankruptcy.  The  lenders  of  the  capital 
in  such  cases  have  taken  the  building  and  lost  nothing, 
while  employees  of  the  bankrupt  company  have  lost  their 
wages. 


THE   GERMAN   WORKINGMAN  125 

We  can  now  begin  to  appreciate  the  factors  other  than 
wages  which  enter  into  consideration  in  comparing  the 
condition  of  workingmen  of  different  countries.  Lower 
wages,  even  lower  "real"  wages,  can  be  accompanied  by 
just  as  high  or  higher  standard  of  happiness.  It  is  often 
wonderful  what  a  small  income  can  be  made  to  do  if  its 
owner  concentrates  his  whole  attention  to  utilizing  it  to 
the  greatest  possible  advantage.  We  may  often  see  this 
among  certain  people  in  our  own  country  who  receive  fixed 
incomes  which  they  are  powerless  to  increase.  Their 
energies  are  not  diverted  to  making  more  money,  but  are 
directed  toward  making  that  money  which  they  have  bring 
the  greatest  results.  Here,  I  think,  is  the  explanation  of  the 
German  household  miracle,  the  decent  maintenance  of  a 
family  on  seventy-five  cents  to  a  dollar  per  day.  We  don't 
know  how  it  is  done,  we  know  only  that  it  is  done. 

The  government  takes  an  active  interest  in  helping  the 
poor  man  make  the  most  of  his  small  income.  While  the 
taxes  are  often  cruelly  heavy,  yet  they  are  so  scientifically 
distributed  that  the  burden  is  as  light  as  possible.  The 
small  property-holder  or  the  recipient  of  a  taxable  income 
is  spared  the  indignation  of  seeing  his  wealthy  neighbor 
"dodging"  his  share  of  the  tax.  He  also  has  visible  evi- 
dence always  before  his  eyes  of  the  use  to  which  his  con- 
tribution is  being  put,  in  the  clean  streets  and  in  the  various 
municipal  enterprises.  He  is  not  troubled  by  the  thought 
that  most  of  his  tax  payments  are  going  into  the  pockets 
of  the  "grafters."  The  government,  moreover,  does  not 
give  letters  of  marque  to  great  public-service  corporations 
and  turn  them  loose  to  prey  upon  the  public.  When  the 
municipality  does  not  perform  the  service  itself,  it  takes 
care  that  those  to  whom  it  has  confided  this  public  duty 
do  not  abuse  their  right,  and  it  reserves  a  considerable 
authority  to  regulate  the  actions  of  the  companies.  In 
Berlin  the  street  railways  and  some  of  the  gas  plants  are 
privately  owned,  but  the  universal  fare  is  two  and  a  half 


126     INDUSTRIAL   PROGRESS   OF   GERMANY 

cents,  and  the  price  of  gas  less  than  one  third  that  charged 
in  Chicago. 

DUsseldorf,  one  of  the  medium-sized  manufacturing 
cities  of  the  Westphahan  district,  is  a  good  example  of 
what  the  public  authorities  do  for  the  welfare  of  the  citi- 
zens. The  following  enterprises  are  under  municipal 
control:  water  supply,  gas,  electric  light,  electric  street 
railways,  parks,  markets,  quays,  slaughter-houses,  savings- 
banks,  mortgage  business,  pawn-shop,  libraries,  baths, 
theatre,  concert  hall,  orchestra,  museums,  picture  gallery, 
police,  fire  department,  workhouse,  outdoor  relief,  night 
refuge,  workmen's  dwellings,  sick-insurance,  numerous 
endowed  charities,  hospitals,  cemeteries,  and  art  schools. 

Besides  the  greater  steadiness  in  the  rate  of  wages  and 
the  absence  of  such  extremes  as  we  find  in  England  and 
America,  there  is  also  less  changing  of  employment  and 
less  non -employment  in  Germany.  Men  do  not  change 
their  employment,  nor  move  from  one  establishment  to 
another  so  readily.  In  most  cases  the  law  requires  at  least 
a  two  weeks'  notice  before  the  employee  can  be  discharged 
or  leave  the  business. 

We  may  safely  say,  I  think,  that  the  relation  between 
the  employer  and  the  employee  is  less  a  transaction  for 
the  buying  and  selling  of  labor  force  than  in  laissez-faire 
England  and  America.  The  close  interest  which  Herr 
Krupp  took  in  the  welfare  of  his  employees  is  duplicated 
on  a  smaller  scale  all  over  the  country.  Though  the  old 
guild  system  has  practically  passed  away,  yet  one  of  its 
leading  ideas,  that  the  workman  has  a  right  to  expect 
his  trade  to  support  him,  still  survives  to  a  large  degree. 
Capitalism  has  not  been  able  to  destroy  entirely  these 
old  customs;  the  contributions  of  the  employers  to  the 
insurance  funds  of  the  workmen  testify  to  the  more  per- 
manent relation  which  exists  between  the  employer  and 
the  employee  than  we  are  accustomed  to  find  in  our  own 
country. 


THE   GERMAN   WORKINGMAN  127 

The  German  civil  service  is  the  best  example  of  per- 
manency of  employment.  The  young  men  who  enter  it 
expect  to  remain  there  all  their  lives,  to  receive  a  pen- 
sion in  their  old  age,  and,  if  they  die  or  are  disabled,  to 
leave  their  families  provided  for  by  the  state.  They  can- 
not be  dismissed  without  good  cause,  and  promotion 
comes  as  a  reward  for  length  of  service  rather  than  for 
good  work  or  efficiency.  Their  hours  are  short,  and  they 
are  free  after  three  o'clock  in  the  afternoon,  in  most  of  the 
offices. 

The  factory  legislation  of  Prussia  throws  some  light  on 
the  conditions  surrounding  the  working  class.  The  laws 
may  seem  to  be  less  thorough  and  protective  to  the  work- 
man than  in  England,  but  it  must  be  remembered  that  the 
Prussian  laws  are  enforced,  and  consequently  greater  care 
is  taken  in  their  making.  Therefore  they  are  not  so  strict 
as  to  be  impracticable,  but  at  the  same  time  strict  enough  to 
protect  the  workmen,  while  hampering  business  and  enter- 
prise as  little  as  possible.  Even  in  those  explicit  rules  for 
special  trades  there  is  a  marked  avoidance  of  those  minute 
hard-and-fast  directions  which  are  apt  to  be  annoying 
without  being  effective. 

The  law  provides  that  the  rules  of  each  factory  must  be 
posted  up,  and  that  they  must  state  definitely  the  hours  of 
work,  meal-times,  time  and  manner  of  paying  wages,  the 
length  of  time  of  notice  to  quit,  punishments,  and  fines. 
These  rules  must  be  approved  by  the  factory  inspector 
within  three  days  of  their  passage,  and  it  is  his  duty  to  see 
that  they  comply  strictly  with  the  law.  Before  the  rules 
go  into  effect,  the  workmen  are  given  a  chance  to  criticise 
or  make  suggestions. 

Children  under  thirteen  years  of  age  may  not  be  em- 
ployed. From  thirteen  to  fourteen  years  they  may  not 
be  employed  longer  than  six  hours  per  day.  From  four- 
teen to  sixteen  years  their  working  day  must  not  exceed 
ten  hours,  with  at  least  one  hour  at  noon  and  two  half- 


128      INDUSTRIAL   PROGRESS   OF   GERMANY 

hour  recesses,  one  in  the  forenoon  and  one  in  the  after- 
noon, unless  the  working  day  is  less  than  eight  hours  long. 
In  1901  there  were  9454  children  employed  who  were  from 
thirteen  to  fourteen  years  of  age,  25  per  cent  of  whom 
were  in  the  textile  industry.  The  officers  of  education  have 
the  right  to  compel  employers  to  allow  their  employees 
under  eighteen  years  of  age  the  opportunity  of  attending 
the  continuation  schools,  if  these  are  in  session  during  the 
working  day. 

Women  are  not  allowed  by  law  to  do  night  work,  nor 
must  they  be  employed  more  than  eleven  hours  per  day, 
and  not  more  than  ten  hours  on  Saturdays  and  days  before 
holidays.  If  they  are  also  housekeepers,  they  may  demand 
an  extra  half  hour  at  noon.  Mothers  may  not  be  employed 
for  four  weeks  after  confinement,  nor  for  two  weeks  longer, 
unless  they  have  a  physician's  certificate. 

The  legal  holidays  are  Sunday,  New  Year's  Day,  Easter 
Monday,  Ascension  Day,  Whitmonday,  Busstag  (a  religi- 
ous holiday),  and  two  days  at  Christmas.  In  Catholic 
states  there  are  several  more  holidays. 

The  men  may  be  punished  with  fines,  but  they  are 
limited  in  amount,  and  the  money  derived  therefrom  must 
be  turned  over  to  the  sick  funds  for  the  benefit  of  the 
employees. 

As  a  rule,  the  factories  are  kept  in  a  much  better  condi- 
tion, and  have  more  arrangements  for  the  comfort  of  the 
men,  than  in  the  United  States.  This  is  the  general  opin- 
ion of  writers  who  compare  the  conditions  prevailing  in 
the  two  countries,  and  it  seems  to  be  confirmed  by  direct 
observation.  The  factories  usually  have  good  light  and  air, 
are  clean  and  orderly.  The  sanitary  arrangements  and  the 
facilities  for  washing  and  changing  clothes  are  splendid. 
Most  of  the  factories  are  provided  with  lockers  for  the  men, 
so  that  they  need  not  leave  the  place  in  their  working- 
clothes.  Very  often  shower  baths  are  available.  The  Ger- 
man habit  of  taking  a  meal  in  the  forenoon  and  another 


THE   GERMAN   WORKINGMAN  129 

in  the  afternoon  during  the  working-time  has  led  to  the 
estabhshment  of  dining-rooms  in  many  factories,  where 
the  men  may  procure  a  cup  of  coffee  or  a  glass  of  beer. 

The  actual  working-time  in  the  average  German  fac- 
tory is  ten  hours,  but  the  day  appears  longer  on  account 
of  the  three  breaks  for  meals,  taking  up  from  one  and 
a  half  to  two  and  a  half  hours.  A  competent  authority 
makes  the  statement  that  the  hours  average  one  per  day 
more  than  in  England,  and  one  less  than  in  the  United 
States.  The  English  Saturday  half  holiday  is  an  advan- 
tage which  the  workmen  of  that  country  enjoy  over  the 
German. 

The  German  trades-unions  lack  the  strength  and  solidar- 
ity of  the  English  and  American.  Perhaps  one  of  the  rea- 
sons for  this  may  be  found  in  the  workingman's  insurance 
laws,  of  which  we  will  speak  later.  The  government  has 
here  usurped  one  of  the  functions  elsewhere  performed 
by  the  trades-unions,  and  which  is  one  of  the  sources  of 
their  strength. 

The  right  of  combination  is  guaranteed  by  the  German 
law  to  all  employers  and  employees,  except  servants, 
agricultural  laborers,  and  seamen,  for  the  purpose  of 
obtaining  a  more  favorable  wage  and  work  conditions. 
Strikes  and  lockouts  are  recognized  as  legitimate  means 
in  industrial  disputes ;  but  if  the  means  adopted  are  action- 
able under  the  ordinary  law,  then  the  action  lies  against 
the  combination  and  the  persons  acting  for  it.  Physical 
compulsion,  denunciation,  intimidation,  or  abuse  for  the 
purpose  of  inducing  others  to  join,  or  to  prevent  them  from 
leaving,  —  such  combinations  are  punishable  with  three 
months'  imprisonment,  or  more  if  the  offense  falls  within 
the  competence  of  the  criminal  law. 

Politics  plays  a  very  large  role  in  German  trades- 
unionism;  in  fact,  politics  has  divided  the  unions  into 
three  distinct  classes.  The  largest  is  the  Free  Social 
Democratic   Union,   which   in    1902   numbered    678,181 


130     INDUSTRIAL   PROGRESS   OF   GERMANY 

members.  It  forms  the  most  important  element  in  the 
Social  Democratic  party.  The  Christian  Union,  on  the 
other  hand,  is  particularly  opposed  to  the  atheistic  features 
of  the  Social  Democracy.  It  does  not,  however,  represent 
any  particular  religious  propaganda.  In  1902  it  numbered 
84,667  members. 

In  both  these  central  unions  the  membership  is  fluc- 
tuating, their  property  small,  and  their  funds  system  very 
undeveloped.  The  leaders  of  these  unions  were  opposed 
to  state  insurance,  and  preferred  that  the  money  of  the 
workingman  should  be  used  in  political  agitation.  For 
many  years  the  unions  have  been  weakened  by  this  attempt 
on  the  part  of  the  political  leaders  to  make  them  mere 
auxiliaries  to  the  Social  Democratic  party. 

At  present  a  change  is  being  effected,  and  the  unions 
are  becoming  less  political  and  more  like  the  English 
and  American;  consequently  they  have  gained  rapidly 
in  strength.  There  is  also  a  tendency  for  the  Social  De- 
mocratic and  the  Christian  unions  to  get  together;  and 
there  is  no  doubt  but  that,  when  the  Social  Democratic 
unions  lose  some  of  their  most  pronounced  socialistic  fea- 
tures, especially  their  atheistic  doctrines,  the  two  will  amal- 
gamate to  the  great  advantage  of  the  cause  of  organized 
labor. 

The  third  class,  the  Hirsch-Dunker  unions,  are  modeled 
on  the  English  plan  and  hold  aloof  from  politics.  They 
repudiate  the  socialistic  idea  of  class  war,  and  seek  to  adjust 
peacefully  the  relations  between  capital  and  labor.  Their 
membership  is  100,000,  and  is  composed  of  the  highest 
class  of  workingmen.  They  place  great  reliance  on  self- 
help  for  the  workingman.  One  of  their  activities  is  the 
insurance  of  their  members  against  non-employment,  the 
one  form  of  workingmen's  insurance  which  has  not  been 
taken  up  by  the  government. 

The  usual  amount  of  contribution  to  the  unions  by  the 
members  runs  from  two  and  a  half  to  seven  cents  per  week; 


THE   GERMAN   WORKINGMAN  131 

in  the  Hirsch-Dunker  unions  the  rate  sometimes  runs  up 
to  fourteen  cents. 

Germany  was  the  first  nation  to  introduce  successfully 
a  system  of  workingmen's  insurance  under  the  control  of 
the  government.  We  are  told  that  the  principal  motive 
behind  this  social  legislation  was  the  desire  to  limit  the 
spread  of  socialism  among  the  laboring  class.  The  idea, 
however,  is  very  congenial  to  the  German  mind,  which 
has  the  habit  of  expecting  the  state  to  do  things  with  no 
fear  of  the  reproach  of  paternalism.  Moreover,  the  pension 
system  for  all  employees  of  the  government  and  the  im- 
mobility of  the  working  population  furnished  the  pattern 
and  facilitated  the  introduction  of  the  system.  What  we 
have  said  in  the  preceding  pages  about  the  permanence 
of  employment,  the  difficulty  and  rarity  of  changes  from 
one  occupation  to  another,  the  enormous  obstacles  which 
prevent  a  workingman  from  ever  becoming  anything  else 
than  a  workingman,  and  which  even  hinder  him  from 
passing  from  one  trade  to  another,  the  slow  and  easy-going 
temperament  of  the  German,  —  all  these  things  enable  us 
to  understand  why  it  was  easy  to  introduce  workingmen's 
insurance,  and  why  it  was  successful. 

That  the  effect  of  this  insurance  is  to  make  the  work- 
ing people  improvident  is  contradicted  by  the  statistics 
of  savings.  In  1882  only  one  person  in  eight  had  a  sav- 
ings-bank account;  in  1897  one  person  in  four  in  Prussia 
possessed  an  account.  The  amount  on  deposit  had  in- 
creased in  this  period  threefold,  amounting  to  a  total  of 
$1,250,000,000  in  1897.  Twenty-eight  per  cent  of  this 
sum  consisted  of  accounts  of  less  than  $15, 16  per  cent  of 
from  $15  to  $33;  15  per  cent  of  from  $38  to  $75;  and 
4  per  cent  of  over  $750.*  The  savings  per  capita  in  Eng- 
land amount  to  about  one  half  those  in  Germany. 

The  ideas  on  which  the  German  insurance  system  is 
based  are  compulsory  thrift,  state  aid,  and  employers' 
*  Von  Halle,  Volks-  und  Seevnrtschaft,  p.  59. 


132     INDUSTRIAL  PROGRESS   OF   GERMANY 

liability.  The  workingmen  are  compelled  by  law  to  par- 
ticipate in  the  scheme;  the  state  contributes  from  the 
pubhc  funds  to  help  bear  the  expenses  of  the  system,  and 
the  employers  are  to  take  a  large  share  in  organizing  and 
in  supporting  the  system. 

The  first  insurance  inaugurated  by  the  state  was  insur- 
ance against  sickness,  the  law  being  passed  in  1883.  It  was 
made  compulsory  in  manufacturing,  commerce,  and  trade, 
and  local  authorities  were  empowered  to  extend  it  to  other 
classes  of  the  population. 

The  expenses  of  this  insurance  are  defrayed  from  funds 
which  are  under  the  control  partly  of  the  state  and  partly 
of  local  associations  of  employers.  The  premiums  average 
from  1|  to  3  per  cent  of  the  wages  of  the  workmen  insured; 
two  thirds  is  paid  by  the  men  and  one  third  by  the  employ- 
ers. From  nine  to  ten  million  persons  are  insured,  and  in 
1900  four  million  persons  received  benefit  from  the  funds, 
amounting  altogether  to  $42,000,000.  The  benefit  includes 
free  medicine,  attendance,  and  a  payment  of  at  least  one 
half  of  the  customary  wages,  or  free  treatment  in  a  hospital 
with  half  pay  to  the  family.  The  maximum  period  for 
receiving  this  benefit  is  thirteen  weeks. 

The  law  creating  the  system  of  insurance  against  acci- 
dent was  passed  in  1884  at  the  instigation  of  Emperor 
William  I.  It  makes  it  compulsory  for  all  the  employers 
of  a  certain  district  to  belong  to  an  association  composed  of 
men  active  in  the  particular  industry.  These  associations 
have  a  legal  personality  and  are  self-governed.  The  funds 
are  maintained  by  the  contributions  of  the  members,  the 
amount  being  assessed  on  each  one  according  to  the  total 
amount  of  wages  he  pays.  Payments  to  the  beneficiaries 
begin  only  after  the  thirteenth  week  from  the  date  of  the 
accident,  the  first  thirteen  weeks  falling  under  the  care  of 
the  sick-insurance  funds.  The  benefit  consists  of  free 
medical  treatment  and  the  receipt  of  a  part  of  the  usual 
wages  up  to  two  thirds,  depending  upon  the  seriousness 


THE   GERMAN   WORKINGMAN  133 

of  the  injury  and  the  helplessness  of  the  patient.  In  case 
death  ensues  as  a  result  of  the  accident,  a  burial  allowance 
of  no  less  than  twelve  dollars  and  a  pension  to  the  fam- 
ily of  from  20  to  60  per  cent  of  the  former  earnings  of 
the  deceased  are  made.  This  insurance  lays  no  burdens 
upon  the  workingman,  since  the  whole  cost  falls  upon 
the  employers. 

In  1901  6,884,076  employees  in  industrial  occupations 
were  insured,  and  384,566  persons  received  a  total  benefit 
of  $26,084,865. 

The  insurance  against  infirmity  and  old  age  is  made 
compulsory  on  every  person  over  sixteen  years  of  age  work- 
ing for  wages  of  less  than  $487  per  year,  except  officers  of 
the  government  who  are  otherwise  provided  for.  Persons 
who  earn  wages  of  more  than  $487  and  less  than  $730 
may  insure  voluntarily.  The  system  was  introduced  by  a 
law  of  1889,  and  is  therefore  the  latest  of  the  working- 
men's  insurance  laws. 

The  insured  are  divided  into  five  classes,  according  to 
income.  The  five  classes  and  the  amount  of  pension  they 
receive  in  case  either  of  infirmity  or  old  age  are  as  fol- 
lows :  — 

Weekly  Benefits 

Payments  Old  age  Infirmity 

(1)  Incomes  up  to  $85                    3|  cts.  $27  $27 

(2)  Incomes  of  $85  to  $134            5  34            29 

(3)  Incomes  of  $134  to  $207           6  41             32 

(4)  Incomes  of  $207  to  $280          7^  49            34 

(5)  Incomes  of  $280  to  $730          9  56            36 

The  premiums  are  paid  by  means  of  books  in  which 
stamps  are  pasted  by  the  employers  to  the  amount  of  the 
premiums.  These  stamps  are  purchased  by  the  employ- 
ers themselves,  and  they  are  permitted  to  deduct  one  half 
of  the  cost  from  the  wages  of  the  employees.  For  every 
person  insured  the  state  contributes  twelve  dollars  to  the 
fund. 

The   infirmity   which   entitles   the   insured   to   receive 


134      INDUSTRIAL  PROGRESS   OF   GERMANY 

benefit  from  the  fund  is  incapacity  to  earn  a  living  for  a 
period  of  twenty-six  weeks.  Persons  must  have  been 
insured  for  from  two  hundred  to  five  hundred  weeks  before 
they  can  claim  benefit.  Persons  who  are  undergoing  mil- 
itary service  or  who  are  incapacitated  by  sickness  are 
exempt  from  the  payment  of  premiums,  but  the  time  is 
reckoned  in  as  part  of  the  total  length  of  the  insured  time. 
An  important  point  with  regard  to  infirmity  insurance  is 
a  provision  for  insured  persons  who  by  sickness  are 
incapacitated  from  earning  their  living.  In  such  cases  the 
insurance  ofiicers  are  empowered  to  undertake  the  medical 
treatment  of  the  person  in  a  hospital  or  sanitarium ;  and  if 
the  person  is  subject  to  sick  insurance  also,  the  obligation 
of  the  latter  passes  on  to  the  infirmity  insurance,  but  the 
amount  expended  is  reimbursed  by  the  funds  of  the  sick 
insurance. 

The  old-age  pensions  begin  after  the  seventieth  year  of 
age.  The  person  must  have  been  insured  at  least  twelve 
hundred  weeks  to  be  entitled  to  the  pension. 

The  number  of  claims  allowed  in  the  period  1891-1901 
have  been:  for  infirmity,  734,251,  averaging,  in  1900, 
$35.50  each;  and  for  old  age,  389,971,  averaging,  in  1900, 
$36.46  each. 

Concerning  workingmen's  insurance  in  general,  the 
following  statistics  show  the  scope  to  1902:  — 

Number  of  persons  insured  6,736,000 

Total  amount  of  benefits  paid  $105,603,000 

Of  this  amount  the  state  paid  10,073,000 

Employers  paid  51,068,000 

Employees  paid  44,285,150 

The  employees  received  a  benefit  of  $61,317,000  beyond 
the  amount  of  their  contributions.  The  total  benefit,  how- 
ever, measured  in  the  increased  welfare  and  happiness 
of  the  people,  has  been  far  greater  than  any  money  gain, 
for  the  insurance  system  has  taken  away  a  great  load  of 
anxiety  and  worry,  not  only  from  the  workingman  himself. 


THE   GERMAN   WORKINGMAN  135 

but  from  his  family,  who  will  be  provided  for  during  the 
incapacity  or  after  the  death  of  the  bread-winner. 

Quoting  from  the  report  of  the  correspondent  of  the 
London  Times  (1903),  from  which  most  of  the  above 
statistics  have  been  taken:  — 

"With  regard  to  the  efficiency  of  labor,  the  insurance  has  de- 
veloped a  very  remarkable  and  unforeseen  result.  The  prospect 
of  having  a  great  and  increasing  number  of  chronic  invalids  on 
their  hands  has  stimulated  the  insurance  officers  and  societies 
to  a  great  preventive  movement.  Seventy  to  eighty  sanitariums 
have  been  built  by  the  insurance  societies,  with  seven  thousand 
beds.  These  are  for  cases  of  consumption  alone;  67.3  per  cent 
of  the  patients  were  fully  restored  to  work,  7  per  cent  were  fully 
capable  of  other  work,  14.6  per  cent  were  partly  capable  of  other 
work,  and  only  11  per  cent  were  not  able  to  earn  a  living." 

The  housing  question  has  been  one  of  the  great  social 
problems  of  Germany  for  the  last  few  years,  and  an  im- 
mense amount  of  literature  has  been  written  on  the  sub- 
ject. The  great  and  sudden  growth  of  the  large  cities  and 
factory  towns  has  created  a  demand  for  dwellings  which 
has  run  far  ahead  of  the  supply,  and  has  led,  in  many 
places,  to  overcrowding.  In  factory  towns  the  average  is 
generally  over  two  persons  to  the  room,  which  is  very 
much  higher  than  under  similar  circumstances  in  England, 
where  the  rents  for  workingmen  average  scarcely  more 
than  half  as  much  as  in  Germany. 

In  the  latter  country  the  rent  averages  from  forty  to 
sixty  cents  per  week  for  an  unfurnished  room.  The  per- 
centage of  the  workingman's  income  which  goes  for  rent 
in  the  different  German  cities  has  been  calculated  by 
Mr.  W.  J.  Ashley  ^  as  follows :  — 

Yearly  Berlin        Hamhurq       Breslau         Leipzig 

incomes  " 

Under  $150 
$150  to  $300 
$300  to  $450 

*  Ashley,  The  Progress  of  the  German  Working  Classes  during  the  Last 
Quarter  of  a  Century,  p.  49. 


41.6% 

26.5% 

28.7% 

29.9% 

24.7 

23.5 

21.0 

21.2 

21.8 

18.9 

20.8 

19.9 

136      INDUSTRIAL  PROGRESS   OF   GERMANY 

Various  measures  have  been  taken  to  relieve  this  diflfi- 
culty.  In  the  Rhine- Westphalian  district  employers  have 
expended  over  $52,000,000  in  building  houses  and  in 
aiding  their  employees  to  build.  Municipal  authorities 
have  built  houses  and  have  loaned  money  for  building 
at  cheap  rates  of  interest.  In  Prussia  the  state  has  pro- 
vided housing  for  some  of  its  own  officers,  particularly  for 
the  subordinate  railroad  men.  Up  to  1901  it  had  erected 
473  houses,  containing  2231  dwellings  and  7009  rooms, 
costing  $2,195,569. 


; 


CHAPTER   VIII 

CONCLUSION 

The  greatest  problems  which  confront  the  German  Empire 
to-day  are  those  involved  in  the  rapidly  increasing  density 
of  population.  The  one  point  at  which  the  empire  is  at 
odds  with  the  policy  of  the  United  States,  i.  e.  the  Monroe 
Doctrine,  may  be  referred  to  the  same  cause.  Americans, 
as  a  rule,  do  not  understand  the  gravity  of  the  situation 
which  impels  Germany  to  adopt  this  or  that  policy ;  they 
are  too  apt  to  ascribe  to  Germany  a  spirit  of  wanton 
aggressiveness  and  a  lust  for  territorial  expansion,  when  in 
fact  her  policy  has  been  dictated  by  circumstances  which 
leave  no  other  course  open.  A  little  study  of  the  facts  in 
the  case,  therefore,  will  conduce  to  a  better  understanding 
of  the  matter  and  to  sounder  judgments  on  our  part. 

Germany  has  a  population  of  over  fifty-eight  million 
people,  which  is  increasing  at  the  rate  of  over  one  per  cent 
per  annum.  Leroy-Beaulieu  estimates  that  within  a  hun- 
dred years  the  population  will  have  increased  to  two  hun- 
dred million,  an  estimate  with  which  Professor  Schmoller 
agrees.  For  the  last  twenty-five  years  Germany  has  not 
been  able  to  produce  a  sufficient  quantity  of  grain  to  cover 
her  consumption;  her  production  at  present  is  about 
fifteen  million  tons  and  her  consumption  twenty  million 
tons;  therefore  five  million  tons,  or  about  two  hundred 
million  bushels,  must  be  imported.  For  the  future,  it  is 
out  of  the  question  to  expect  that  any  possible  increase  of 
production  will  be  able  to  cover  even  the  increase  in  con- 
sumption, to  say  nothing  of  making  up  the  deficit. 

Russia  may  expand  to  the  east,  the  United  States  to  the 


138      INDUSTRIAL   PROGRESS   OF   GERMANY 

west,  and  France  to  the  south  into  Africa,  while  England 
has  colonies  to  receive  her  superfluous  population.  Ger- 
many, on  the  other  hand,  has  no  chance  to  expand  her 
territory  contiguously  in  any  direction,  and  her  colonies 
m  Africa  have  not  proved  attractive  to  German  emigrants; 
in  1903  there  were  only  226  Germans  migrating  to  the 
whole  continent  of  Africa.  Asia  offers  no  outlet,  and  the 
United  States  stands  guard  over  South  America. 

If  the  mother  country  would  hold  the  allegiance  of  her 
people,  she  must  either  support  them  at  home,  or  extend 
her  authority  over  new  territory.  Experience  has  shown 
that  the  six  to  seven  million  Germans  who  have  left  their 
native  country  are  lost  after  the  second  generation  both 
as  German  citizens  and  as  consumers  of  German  goods. 
These  emigrants  have  cost  the  empire  the  expense  of  their 
education  and  the  capital  which  they  take  with  them  out  of 
the  country.  Schmoller  estimates  that  up  to  1900  these 
emigrants  have  cost  Germany  from  one  and  a  half  to  two 
billion  dollars.  In  view  of  these  facts,  therefore,  emigra- 
tion, as  it  has  taken  place  in  the  past,  is  not  regarded  as  a 
satisfactory  solution  of  the  population  problem. 

If  the  increasing  population  is  to  be  sustained  within  the 
country,  it  can  be  done  only  by  extending  foreign  com- 
merce. Imports  of  food-stuffs  and  raw  materials  must  be 
paid  for  with  exports  of  manufactured  goods,  for  which  a 
market  must  be  found.  Some  of  the  imports  may  be  paid 
for  by  interest  due  on  investments  abroad  and  by  the 
earnings  of  German  ships  in  the  foreign  carrying  trade. 
Investments  abroad,  however,  often  go  to  aid  in  establish- 
ing enterprises  in  foreign  countries  which  compete  directly 
with  the  home  industries,  and  thus  narrow  the  export 
market,  and  so  in  the  end  are  of  doubtful  advantage. 

It  is  estimated  that  over  three  billion  dollars'  worth  of 
foreign  stocks  and  bonds  are  held  by  Germans.  Besides 
this,  there  is  perhaps  nearly  two  billion  dollars  invested 
in  foreign  industry  and  trade,  according  to  the  consular 


CONCLUSION  139 

reports  of  1897  and  1898,  These  foreign  investments, 
amounting  to  over  five  billion  dollars,  yield  an  annual 
income  of  from  two  hundred  and  fifty  to  two  hundred  and 
seventy-five  million  dollars.  The  annual  profit  from  Ger- 
man shipping  is  about  sixty  million  dollars.  Altogether, 
therefore,  Germany  draws  from  three  hundred  to  three 
hundred  and  fifty  million  dollars  from  abroad  every  year 
for  which  she  need  export  nothing.^ 

The  dangers  which  Germany  may  meet  when  she 
depends  upon  foreign  commerce  for  support  and  develops 
into  an  industrial  country  are  of  two  sorts:  the  first 
threatening  her  imports  and  the  second  her  exports.  The 
countries  from  whom  she  derives  her  imports  may  refuse 
to  send  raw  materials  and  food-stuffs,  or  discourage  such 
trade  by  levying  export  taxes,  or  they  may  become  involved 
in  war,  or  their  own  population  may  grow  so  large  as  to 
require  their  whole  produce. 

On  the  other  hand,  there  is  the  danger  that  these  coun- 
tries which  now  afford  good  markets  for  manufactured 
goods  may  in  the  future  produce  for  themselves,  or,  while 
encouraging  their  own  industries,  levy  a  high  import  duty 
on  foreign  products;  finally,  there  is  always  present  the 
danger  of  competition  from  other  industrial  states,  which 
tends  to  become  ever  more  severe.  This  commercial 
rivalry  is  always  a  fruitful  source  of  disputes  which  may 
terminate  in  war. 

The  past  commercial  relations  of  European  nations 
with  the  United  States  have  exhibited  these  dangers.  One 
may  cite  by  way  of  illustration  the  severe  distress  of  the 
English  textile  industries  when  the  export  of  cotton  from 
the  Southern  ports  was  inhibited  during  the  Civil  War; 
the  depression  which  ensued  in  many  industries  after  the 
passage  of  the  McKinley  Bill ;  and  the  latest  danger  arising 
out  of  the  "American  invasion,"  foreshadowing  the  time 

*  Paul  Voigt,  in  Handels-  und  Machtpolitik,  vol.  i,  p.  202.  Stuttgart: 
J.  G.  Cotta.    1900. 


140     INDUSTRIAL  PROGRESS   OF   GERMANY 

when  the  United  States  will  not  only  be  able  to  supply 
most  of  her  own  needs  for  manufactured  goods,  but  will 
become  a  serious  rival  in  the  world  markets. 

Russia  is  another  great  source  from  which  Germany 
derives  her  imported  food-stuffs  and  markets  her  manu- 
factured goods.  The  food-supplies  which  Russia  furnishes, 
however,  do  not  represent  an  excess  of  production,  but 
rather  a  deficit  in  consumption  on  the  part  of  her  own 
people.  If,  out  of  the  present  complications  in  which 
Russia  is  involved,  there  come  political  changes  favorable 
to  industrial  development,  this  source  of  raw  materials 
and  food-stuffs,  as  well  as  this  market  for  manufactured 
goods,  is  likely  to  fail. 

From  the  East  also  threatens  the  danger  of  industrial 
competition.  India  has  already  begun  the  development  of 
her  textile  industry,  and  with  her  cheap  labor  may  usurp 
the  advantage  which  Germany,  in  that  respect,  has  held 
against  England  and  the  United  States  in  that  branch  of 
industry. 

More  difficult  to  estimate  is  the  danger  from  Japanese 
and  Chinese  competition.  What  results  may  come  from 
the  rapid  march  of  events  in  the  Orient  can  only  be  con- 
jectured, but,  because  uncertain,  they  are  none  the  less 
real  and  threatening  for  the  future. 

While  in  recent  times  Germany  has  shown  herself  able 
to  more  than  hold  her  own  in  competition  for  the  world 
markets,  she  has  no  assurance  that  she  can  continue  to 
do  so,  at  least  to  the  same  extent.  England  is  being  thor- 
oughly awakened  out  of  the  lethargy  which  her  long- 
continued  commercial  prosperity  had  induced,  and  which 
permitted  Germany  to  deprive  her  of  so  many  markets 
before  she  realized  her  danger.  Germany  cannot  always 
hold  a  monopoly  of  those  excellent  institutions  which  have 
brought  her  prosperity.  Her  technical  schools  and  her 
universities  are  crowded  with  foreigners  who  return  home 
equipped  with  the  best  instruction  Germany  can  offer. 


CONCLUSION  141 

The  time  has  passed  when  one  country  can  long  retain  any 
artificial  advantage  over  its  rivals ;  each  nation  is  becoming 
more  alert  in  adapting  to  its  own  use  whatever  of  good  it 
can  find  in  the  processes  or  institutions  of  its  neighbors. 

Another  danger  which  threatens  the  foreign  commerce 
of  Germany  is  the  modern  policy  of  national  exclusiveness 
and  self-suflBciency.  The  free-trade  ideas  which  prevailed 
so  generally  during  the  past  century  afforded  industrial 
nations  a  splendid  opportunity  to  extend  their  wealth  and 
power  by  means  of  commerce.  The  tendency  now  is  in 
the  other  direction;  each  nation  is  striving  to  make  itself 
industrially  independent  by  fostering  its  own  manufac- 
tures and  sheltering  them  behind  tariff  walls.  Even  Eng- 
land is  becoming  doubtful  of  the  efficacy  of  free  trade,  and 
is  considering  measures  by  which  the  trade  of  the  British 
Empire  may  be  reserved  for  the  Britons. 

Facts  such  as  these  impel  Germany  to  consider  what  her 
position  in  the  world  market  will  be  when  these  tenden- 
cies shall  have  developed  themselves  further.  The  trade 
of  her  own  colonies  is  as  yet  insignificant.  It  is  most 
natural,  therefore,  that  she  should  begin  to  look  around 
for  markets  which  she  can  control,  and  which  are  not 
liable  to  be  closed  against  her. 

The  only  alternative  possible,  if  Germany  fails  to  sup- 
port her  population  at  home  by  means  of  foreign  trade,  is 
emigration.  Unless  the  empire  can  extend  its  government 
over  those  territories  to  which  the  people  are  willing  to 
emigrate,  she  must  inevitably  lose  them  as  subjects.  The 
same  authority  which  estimated  the  future  population  of 
Germany  at  two  hundred  million  in  one  hundred  years, 
also  calculated  that  the  population  of  the  English-speaking 
nations  with  their  colonies  would  be  nine  hundred  million 
at  the  same  time,  and  that  of  Russia  would  be  three 
hundred  million. 

These  figures  suggest  the  difficulty  which  will  confront 
the  German  Empire  in  maintaining  her  place  as  a  first- 


142      INDUSTRIAL  PROGRESS   OF   GERMANY 

class  power,  even  if  she  is  able  to  hold  intact  as  German 
subjects  the  natural  increase  of  her  population. 

Those  who  see  the  problem  in  this  light  are  agreed  upon 
at  least  one  line  of  policy,  and  that  is  the  increase  of  the 
navy  for  the  protection  of  the  foreign  trade  interests  and 
the  colonial  possessions.  Seventy  per  cent  of  Germany's 
foreign  trade  comes  by  way  of  the  sea,  and  to  this  her 
superior  army  can  offer  little  protection.  In  1900  a  naval 
programme  was  adopted,  which  will  involve  an  expendi- 
ture of  $357,000,000  before  it  is  carried  to  completion. 

After  having  looked  at  the  problem  of  the  German  from 
the  German's  point  of  view,  it  is  not  difficult  to  see  that 
the  recent  increase  of  the  navy  does  not  necessarily  mean 
that  the  empire  is  thinking  of  embarking  on  a  policy 
of  aggression,  or  that  she  contemplates  contesting  with 
England  for  the  dominion  of  the  sea.  The  Germans 
are  not  an  aggressive  people,  but  they  have  among  them 
some  very  clear  thinkers,  who  are  looking  ahead  into  the 
future,  and  who  see  the  problems  which  will  have  to  be 
met.  They  do  not  shrink  from  these  problems,  and  they 
regard  the  increase  of  population  with  approval.  They 
believe  that  Germany  has  a  mission  in  the  world;  as  the 
emperor  expressed  it  in  a  recent  speech,  "the  Germans 
are  the  salt  of  the  earth." 

I  believe  there  is  less  jingoism  among  the  Germans  than 
among  the  Americans,  the  English,  or  the  French.  It  has 
been  said  many  times  that  the  German  is  his  own  severest 
critic,  and  that  he  is  always  ready  to  appreciate  to  the 
fullest  extent  anything  foreign.  It  is  this  quality  which 
has  made  it  so  easy  for  him  to  take  up  and  imitate,  and 
often  to  improve  upon,  the  best  industrial  contrivances 
of  his  neighbors.  That  is  why  the  study  of  foreign  lan- 
guages is  so  highly  regarded  and  so  eagerly  pursued. 
Doubtless  this  lack  of  self-complacency  and  chauvinism 
was  acquired  when  German  unity  existed  only  as  a  dream, 
and  when  there  was  very  little  either  in  industry  or  politics 


CONCLUSION  143 

to  justify  German  self-esteem.  What  eflFect  the  recent 
achievements  will  have  in  this  respect  remains  to  be  seen. 

The  seriousness  of  the  German  national  problems  is 
apt  to  be  underestimated  by  the  American  because  they 
are  so  much  different  from  those  of  his  own  country. 
Political  corruption  does  not  exist  to  any  appreciable 
extent  in  Germany,  and  the  problem  of  the  great  organi- 
zations of  capital  has  not  yet  become  so  serious.  The  best 
guarantee  that  these  problems  or  others  like  them  will  be 
met  if  they  appear,  lies  in  the  law-abiding  character  of  the 
German  citizen.  There  are  probably  fewer  anarchistic 
tendencies  among  the  German  people  than  among  any 
other  nation  in  the  world.  The  rapid  spread  of  Social 
Democracy  may  indicate  dissatisfaction  with  the  present 
regime,  but  it  is  in  no  way  hostile  to  strong  and  efficient 
government.  The  leading  thought  among  the  Social 
Democrats  is  no  longer  revolution  and  implacable  hostility 
between  the  capitalists  and  the  proletariat;  the  majority 
of  the  members  of  the  party,  though  perhaps  not  the 
leaders,  believe  that  the  interests  of  the  workingman  are 
not  sufficiently  represented  in  the  government,  and  that 
the  best  way  to  get  them  represented  is  to  vote  the  Social- 
Democratic  ticket. 

The  best  hope  for  the  future  of  Germany  lies  in  the 
character  of  the  people.  As  a  nation  they  have  the  ability 
to  face  their  problems  squarely  and  to  understand  them 
thoroughly;  they  have  also  the  ability  to  proceed  to  solve 
them  in  the  most  straightforward  and  reasonable  man- 
ner, without  losing  their  direction  in  a  mass  of  side  issues. 
This  comes  from  the  scientific  cast  of  the  German  mind 
—  slow  to  alter,  matter-of-fact,  serious,  and  thorough. 
The  national  mind  is  not  easily  swung  this  way  and  that 
by  slight  causes;  it  took  many  years  for  the  sentiment  of 
national  unity  to  realize  itself,  and  it  was  accomplished  in 
the  slow  but  thorough  way  which  characterizes  whatever 
the  German  does. 


144     INDUSTRIAL   PROGRESS   OF   GERMANY 

In  the  same  way  the  present  industrial  prosperity  of 
the  empire  is  not  an  ephemeral  phenomenon,  but  is  based 
upon  the  firmest  of  foundations,  which  were  preparing 
long  before  the  attention  of  the  world  was  attracted  toward 
industrial  Germany.  For  this  reason  the  present  indus- 
trial condition  is  likely  to  endure  and  even  to  improve. 

The  best  thing  that  the  United  States  has  to  learn  from 
Germany  is  respect  for  law,  both  on  the  part  of  the 
law-makers  and  those  subject  to  the  law.  German  laws 
are  made  to  be  enforced,  and  hence  are  more  scientific- 
ally drawn.  When  a  matter  requiring  the  enactment  of 
a  law  is  proposed  in  a  German  legislature,  a  commission 
is  selected  for  the  purpose  of  draughting  the  law.  This 
commission  is  composed  of  men  who  are  the  most  scien- 
tifically equipped  for  the  task.  Many  of  the  proposals 
come  directly  from  the  ministry,  and  the  ministers  defend 
them  in  person  before  the  assemblies.  The  members  of 
the  legislatures  need  not  be  residents  of  the  district  which 
chooses  them,  and  hence  do  not  feel  that  they  represent 
narrow  sectional  interests,  but  rather  the  interest  of  the 
whole  nation.  In  this  way,  trading  or  "  log-rolling,"  which 
is  responsible  for  much  legislative  evil  among  us,  is  avoided 
to  a  large  extent.  Another  advantage  of  this  method  is 
that  it  improves  the  quality  of  the  membership,  since  the 
choice  of  the  electors  is  not  confined  to  residents  of  their 
own  community.  Thus  it  happens  that  a  particularly  able 
man  is  not  excluded  from  candidacy  because  the  people 
of  his  own  district  may  not  care  to  send  him  to  the  legis- 
lative assembly,  either  because  of  political  differences  or 
because  there  may  be  several  very  able  men  residing  in  the 
district. 

The  scientific  men  of  Germany  have  a  closer  relation 
to  the  government  than  in  our  own  country.  The  pro- 
fessors in  the  classical  and  technical  universities  are  officers 
of  the  government,  and  their  assistance  is  constantly 
required  in  matters  which  lie  within  their  field.     For  in- 


CONCLUSION  145 

stance,  Dr.  Ernst  von  Halle,  a  professor  in  the  University 
of  Berlin,  is  also  an  officer  in  the  naval  department  because 
of  the  special  study  which  he  has  made  of  the  foreign  rela- 
tions of  Germany  in  regard  to  economic  affairs.  The 
nation,  therefore,  is  able  to  make  use  of  the  results  of  the 
training,  travel,  and  research  of  Professor  von  Halle  in 
the  most  practical  way.  The  professors  of  the  University 
of  Berlin  are  frequently  members  of  the  Reichstag  or  of 
the  Prussian  legislature  which  meets  in  Berlin,  and  they 
can  perform  their  duties  as  legislators  without  abandon- 
ing their  university  chairs. 

Probably  we  can  put  down  as  one  of  the  most  funda- 
mental and  important  causes  of  the  present  prosperity  of 
the  German  nation  the  close  relations  which  exist  in  that 
country  between  science  and  practical  ajfairs.  The  German 
university  professors  are  not  only  officers  of  the  govern- 
ment, but  their  advice  and  assistance  is  often  asked  for 
by  any  of  the  governmental  departments  when  the  sub- 
ject falls  within  their  especial  province.  When  men  like 
Professor  Adolph  Wagner  have  a  hand  in  draughting 
legislation  dealing  with  taxation  and  state  finance,  it 
goes  without  saying  that  such  legislation  will  have  a  scien- 
tific character  that  distinguishes  it  broadly  from  legisla- 
tion drawn  up  by  practical  politicians. 

The  same  thing  prevails  in  industry.  The  men  who 
have  the  technical  direction  of  the  processes  and  the 
experimental  laboratories  have  been  trained  in  the  tech- 
nical schools,  and  are  able  to  bring  into  practical  use  the 
latest  achievements  of  science.  The  system  for  the  utili- 
zation of  the  newest  scientific  discoveries  is  quite  perfect; 
besides  maintaining  their  own  laboratories  and  staff  of 
scientists,  many  of  the  large  chemical  concerns  pay  retain- 
ing fees  to  the  professors  in  the  universities  to  act  as  their 
technical  advisers,  and  to  agree  to  give  the  company  the 
benefit  of  any  scientific  discovery  they  may  make. 

The  fear  of  an  "  American  Invasion "  has  occasioned 


146      INDUSTRIAL   PROGRESS   OF   GERMANY 

a  vast  amount  of  discussion  about  America  in  Germany 
recently.  There  is  genuine  alarm  among  large  numbers 
of  people  lest  the  expansion  of  the  American  industries 
destroy  the  foreign  trade  of  the  Germans  and  even  invade 
the  home  market.  The  best  authorities  on  the  subject 
who  are  able  to  make  a  scientific  comparison  of  the  rela- 
tive capacity  of  the  two  countries  are  of  the  opinion  that 
the  "American  Invasion"  is  simply  a  "scare"  without 
any  reasonable  foundation.  Geheim  Kommerzienrat,  L.  M. 
Goldberger,  whose  recent  book  is  regarded  as  a  highly 
scientific  work,  writes  on  "The  American  Peril"  in  the 
Preussische  Jahrhucher  as  follows :  — 

'"The  Land  of  Unlimited  Possibilities'  is  far  from  being  a 
land  of  invincible  preeminence.  While  I  do  not  underestimate 
the  lead  which  she  has  justly  taken  by  reason  of  her  immeasur- 
able productive  resources,  her  enterprise,  organizing  skill,  and 
remorseless  pursuance  of  her  own  interests,  I  nevertheless  know 
the  darker  side  of  American  development  and  recognize  the 
causes  which  will  ultimately  operate  against  the  tree  of  Amer- 
ican enterprise,  —  reaching  like  Jack's  beanstalk  to  the  Heavens. 
The  Brobdignagian  enterprises  of  the  American  Trusts,  working 
with  their  millions  and  milliards  and  swaying  the  fate  of  the 
entire  country,  are  'fruits  on  the  tree  of  a  protective  tariff'  which 
will  be  endured  by  the  buyers  and  workers  whom  the  Trusts 
have  exploited  only  so  long  as  these  visibly  benefit  by  the  sys- 
tem, i.  e.  so  long  as  their  profits  and  wages  increase  under  the 
Trust  regime.  But  the  coalition  of  the  working  classes  which 
is  rapidly  developing  will  soon  represent  their  own  interests  as 
forcibly  and  inexorably  as  the  employers  on  their  part  have 
done.  Once  the  working  classes  have  attained  their  goal,  they 
will  stretch  forth  a  strong  hand  towards  political  power.  And 
they  will  know  how  to  get  it.  They  will  force  employers  to  listen 
to  the  claims  of  their  laborers.  This  must  and  will  within  the 
next  few  years  disperse  to  a  large  extent  the  'American  Peril' 
which  threatens  Germany  in  the  field  of  industrialism. 

"  America's  practically  organized  factories,  her  extensive  use 
of  special  machines  in  all  branches  of  manufacturing,  her  in- 
ventiveness, etc.,  etc.,  will  in  any  case  serve  to  maintain  for  her 
the  lead  over  Germany  for  years  to  come  —  in  certain  industrial 


CONCLUSION  147 

fields.  But  all  that  she  has  done  we  can  imitate,  and  already 
have  imitated  in  our  modern,  better  conducted  factories.  We 
must  still  learn,  however,  and  must  take  the  lesson  seriously, 
to  keep  our  eyes  open  unceasingly  and  be  swift  to  recognize 
danger,  to  study  wherein  the  advantage  of  our  adversary  lies 
and  imitate  accordingly.  But  in  all  this  striving  we  must  not 
underestimate  our  own  strength,  or  suffer  the  appearance  of  the 
epidemic  Kleinheitwahn  among  us;  let  us  remember  with  what 
sure-footed  uniformity  of  tread  German  industry  has  made  its 
way  to  the  front. 

"  In  England  industrial  progress  has  been  at  a  standstill  every- 
where. America  has  gone  ahead  in  the  same  field  by  leaps  and 
bounds.  Germany's  progress  though  slow  has  been  sure,  and 
percent  for  percent  is  probably  equal  to  America's.  We  must 
remain  conscious  of  the  fact  that  nothing  could  be  more  inju- 
rious to  the  true  interests  of  the  Fatherland  than  for  us  to  whine 
and  truckle  and  beat  the  big  drum  to  the  sound  of  that  obnox- 
ious catchword,  'The  American  Peril.'" 


UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 


AA    001  001  307   6 


^>^ 

